Data centers could be a nightmare to insure, given their flammability, energy and water use and potentially toxic emissions, according to a new report.
The analysis from AM Best raises questions about whether the U.S. insurance industry is able to cover the wide range of damages that data centers could cause. Many of the problems outlined in the report mirror community concerns that the power-hungry facilities will increase electricity prices, constrain water availability and spread air pollution from backup diesel generators.
Data centers place “a substantial strain on the power grid” and use “very large quantities of water for cooling,” which could generate third-party lawsuits from local businesses and residents, AM Best said.
The ratings agency also warned that data centers face heightened liability because their “unprecedented heat loads” increase fire risk. In addition, shutdowns could create enormous liability for interrupting the operations of businesses that use data centers.
