Central Insurance Blog

Electrical contractors play a critical role in powering the digital world. Nowhere is that more evident than on a data center jobsite, where a single misstep in installation, timing, or documentation can jeopardize millions of dollars in equipment and operations. 

As demand for cloud services, AI, and high-performance computing surges, electrical contractors in this space face higher stakes, tighter tolerances, and unique risk exposures that demand specialized insurance coverage.

To better understand these complexities, we spoke with Ryan Lynch, construction underwriter at Central Insurance. In this article, Lynch shares key risks contractors should prepare for and explains how the right insurance and risk management approach can help protect your business while positioning you for growth.

Specialized Risks on Data Center Jobsites

Working on a data center project is unlike any other electrical job. Even the slightest delay can be catastrophic for project timelines and the contractors involved when working on these high-security, high-value facilities.

As a result, electrical contractors working in or around data centers operate under higher scrutiny. The electrical infrastructure must support nonstop uptime, handle extreme loads, and comply with national electrical codes and facility-specific standards, often while projects evolve throughout the build. Understanding what sets these projects apart is essential to managing risk and meeting expectations.

Here we dive deeper into the unique risks electrical contractors face on data center jobsites and the elevated expectations, documentation, and insurance considerations that accompany them.

Zero Tolerance for Downtime

Data centers are built to be always on. Construction teams tightly orchestrate every phase to avoid disruption. Electrical work must support continuous uptime from day one. 

Expensive, Sensitive Equipment

Data center electricians may install transformers, generators, uninterruptible power supply systems, and other mission-critical equipment with low fault tolerance. Damage during handling or storage can be costly, and your insurance coverage should account for that.

Heavier Documentation and Commissioning Protocols

Contractors must provide precise installation documentation, accurate labeling, and detailed support. You’ll likely encounter contract language that includes performance guarantees, indemnity agreements, and insurance specifications well beyond standard project terms. Missed steps or mislabeled systems can result in significant claims or rework. Data center work also frequently involves layers of subcontractors, and if not properly vetted or insured, they could expose you to risks beyond your control. 

Heightened Security Clearance and Background Checks

Crews often need security clearance or individual badging to access data centers. These centers closely monitor site behavior, tool control, and time tracking.

24/7 Project Timelines

Many data center builds operate around the clock, with aggressive schedules and strict nondisclosure agreements that limit what data center contractors can share. Construction schedules are often locked in months in advance, and delays can trigger substantial claims or disqualification from future bids. Communication must be tight, and reliability is paramount.

Insurance Coverages That Support Data Center Contractors

While every project is different, data center contractors should expect to carry tailored insurance coverage that matches the project’s value, complexity, and risk transfer requirements.

Here are a few coverages to discuss with your agent:

General Liability

General liability covers third-party bodily injury or property damage that may occur on-site. Due to the property value and equipment involved, data center projects may require higher limits.

Example: An electrician accidentally knocks over a ladder that strikes a server cabinet, damaging sensitive equipment worth $85,000. Even though the server wasn’t yet live, the GC holds the subcontractor liable for property damage.

Contractor’s Errors & Omissions

Errors and omissions offers protection when you provide design input or preconstruction consulting that an architect or engineer doesn’t formally stamp. This type of collaboration is increasingly common on data center jobs. 

Example: An electrical contractor suggests simplifying the wiring layout to save money and finish faster before construction begins on a new data center. The general contractor and client agree to the change. However, once the building is up and running, the new setup can’t handle the electrical load as expected. Fixing it requires expensive rewiring and delays the opening. 

Installation Floater

An installation floater can cover scheduled materials and equipment from arrival at the site until installation is complete. This floater is especially important for projects where items are stored before installation or held for phased buildouts.

Example: High-voltage transformers worth over $200,000 are delivered to the jobsite and stored in a fenced staging area. Overnight, a storm causes flooding and damages two units before installation.

Contractor’s Equipment

Contractor’s equipment coverage can protect scheduled owned or rented equipment, whether stored on-site or transported between jobs.

Example: Over the weekend, a scissor lift used to install overhead conduit was vandalized. Hydraulic fluid was drained, and wiring was cut, requiring expensive repairs and delaying the electrical crew’s start.

Commercial Umbrella

Umbrella coverage expands the limits of your primary liability policies. Data center contracts often require higher coverage thresholds than typical construction jobs.

Example: A data center contractor accidentally starts a small fire while torching insulation near wiring. They contain the flames, but the smoke damage spreads throughout the partially active facility. Damages total $2 million, exceeding the electrical contractor’s general liability policy limits. 

Evaluate coverage against your project scope, contract requirements, and operational needs. Your agent can help ensure your policy language aligns with these. 

Risk Management: What Sets Successful Data Center Contractors Apart

The most competitive data center contractors bring more than technical skill; they also demonstrate a proven commitment to safety, efficiency, and partnership. These qualities often separate one-time vendors from long-term collaborators.

Here, we explain the strategies you can implement today to mitigate common data center risks. 

1. Prioritize a Strong Safety Culture

OSHA compliance is just the starting point. Data center owners and general contractors often expect a higher safety standard.

• Provide consistent jobsite safety training tailored to project-specific risks
• Enforce PPE usage and conduct regular checks
• Document incidents thoroughly and take action to improve

2. Thoroughly Vet Contractors

Subcontractor missteps can quickly become your liability. The steps below help ensure you do your due diligence when hiring subcontractors. 

• Always request Certificates of Insurance
• Verify dates, coverage limits, and endorsements, like additional insurance and waiver of subrogation 
• Implement a strong sub-contractor agreement with appropriate contractual risk transfer.
• Set a reminder to confirm renewal mid-project if the timeline spans multiple policy periods 

3. Keep Your Jobsite Organized

How you operate on-site shapes your reputation and your risk profile.

• Secure tools and materials—especially high-value items—stored before installation
• Track equipment usage across phases and trades
• Follow all general contractor protocols, including check-in/check-out procedures and tool tagging systems.

4. Proactively Coordinate Schedules

Avoiding conflict with other data center contractors keeps the project on track and helps maintain client relationships. 

• Communicate any scope or timing changes immediately
• Build in time buffers for inspections, testing, and commissioning
• Review the master schedule weekly to anticipate and avoid overlaps or delays

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Questions to Ask Before Accepting a Data Center Job

Before accepting a data center job, it’s essential to consider whether you’re prepared and protected for this work’s added complexities and liabilities.

Use the checklist below to evaluate your preparedness and guide conversations with your agent while reviewing your coverage needs:

• Are your subcontractors properly insured and vetted? Sub coverage gaps can quickly become your liability. Confirm their policies, endorsements, and exclusions up front.
• Do you have a plan for securing materials before installation? Data center jobs often involve expensive electrical components stored on-site before they’re commissioned. Installation floaters or contractor’s equipment coverage may be needed.
• Can your current policy limits meet the project’s contractual requirements? Many data center contracts require higher limits, specific endorsements, and umbrella coverage.
• Do you have documentation procedures in place for equipment testing or labeling? Errors like mislabeled panels or incomplete commissioning logs can lead to delays or claims—written procedures and quality control matter.
• Are you covered if you give input on systems layout or performance sequencing? Any recommendations could carry liability. Ask about errors & omissions coverage to fill the gap.

If you’re unsure about your current coverages and limits, your insurance agent can help you assess risks and adjust accordingly.

The Central Difference

At Central, we understand that data center contracting isn’t just another job; it’s critical infrastructure work that demands precision, speed, and a deep understanding of the specialized risks. 

Our construction team consists of specialists in the field, each with decades of experience working closely with agents and policyholders on complex construction projects like these. Whether reviewing contract requirements, evaluating spec sheets, or identifying potential coverage gaps, our teams can help contractors like you stay ahead of risk and prepared for any project.

Talk to an agent to learn more about how Central can protect your data center contractor projects.