How much does data centre latent defects insurance cost?
As a rough guide, around 0.95% of the rebuild cost for a data centre registered before work starts (with no broker fee on top - we are paid by commission from the provider). Large and complex facilities are priced individually - here is what drives the price and what you pay when.
- Instant response
- Insurer quotes usually within one working day of your proposal
- UK FCA Regulated Broker
- No broker fee to pay
- Specialist commercial underwriters
The rule of thumb
Latent defects insurance cost as a percentage of the rebuild cost
Commercial latent defects cover is usually priced as a percentage of the rebuild cost - what it would cost to build the facility again, not its value when let or sold, and not the value of the equipment inside. The figure covers the insurance premium and the insurer's technical audit and administration fees (with no broker fee on top - we are paid by commission from the provider).
For example, a data centre with a rebuild cost of £20 million, registered before work starts, would come to something in the region of £190,000 on the rule of thumb. A small edge facility with a rebuild cost of £2 million would be around £19,000 on the same basis, or more once minimum premiums and fixed fees are applied (with no broker fee on top - we are paid by commission from the provider).
These are indications only, not quotes. The insurer sets the price once it has reviewed the project, and large or unusual facilities can come out differently from the guide. Extras such as 12 year cover or optional extensions add to it. Your quotation shows the premium, insurance premium tax where it applies and each fee separately.
What affects the premium
What underwriters price a data centre on
- Rebuild cost - the starting point for the price, as the guide above shows
- Size and phasing - the number of buildings or halls and how the campus is delivered
- Design - long spans, floor loading and slab flatness, heavy roof-mounted plant and the envelope design
- Ground conditions, and anything that affects the foundations
- New or existing - a conversion or an extension joined to an older building brings more uncertainty
- Stage of the build - registering before work starts is usually cheapest
- Track record of the developer, the contractor and the build method
- Policy length and extensions, such as 12 years instead of 10, mechanical and electrical plant or loss of rent
What you pay
What a data centre latent defects quote is made up of
Every quotation we give sets out each part of the cost separately, so you can see exactly where the money goes.
Insurance premium
The cost of the cover itself, set by the insurer, plus insurance premium tax where it applies.
Technical audit fees
The insurer's charge for reviewing the design and inspecting the work during the build. On a large facility this can be a significant part of the cost.
Administration fees and our fee
The insurer's administration fee, where it charges one. There is no broker fee to pay. We are paid by commission from the warranty provider, which is included in the premium.
When fees are payable
Most insurers ask for payment when the project is registered or before cover begins, and some split larger projects into stages. Where cover is arranged late, the full cost is usually paid before cover is confirmed. Your quotation will say exactly what is due and when.
Example scenarios
How the price changes from one project to another
These are illustrations, not quotes, and each percentage is a rough guide to the premium and the insurer's fees together (with no broker fee on top - we are paid by commission from the provider). They show why two facilities with similar build costs can be priced very differently.
A colocation hall registered at design stage
A single new building, a clear design and inspections planned from the start. The simplest case, and typically around 0.95% of the rebuild cost.
A hyperscale campus built in phases
Very large build values, several buildings and a long programme. Priced individually, often phase by phase. Around 0.95% is a sensible budgeting figure to start from, but the underwriter's figure can differ once it has seen the detail.
A warehouse converted into a data centre
The insurer is asked to take on an existing structure, so it needs a structural condition survey and prices in the extra uncertainty. Expect it to come out above the 0.95% guide for a new build.
A small edge facility
A low build cost means minimum premiums and fixed audit fees carry more weight, so the percentage is often higher than 0.95%. Grouping several sites into one programme can help.
Already started on site or finished? Cover arranged late is usually the most expensive route - see our sister brand Retrospective Warranties.
Ways to keep the cost down
- Ask for terms while the design is being finalised, and register before work starts on site
- Send full information at the start - drawings, structural calculations, plant loads and the ground investigation
- Show how the roof, plant supports and penetrations are detailed, as these are where many questions come from
- Keep dated records and photographs of work that will be covered up
- Tell the insurer about design, contractor or programme changes early, before they become problems at inspection
- Only add extensions and a 12 year term where your funders, purchasers or tenants actually need them
Request an indication
Tell us about your facility and we will give you an idea of what latent defects insurance is likely to cost, before you commit to anything.
- Takes under a minute
- Instant reply by email with your reference
- Insurer quotes usually within one working day of your completed proposal
- Sites anywhere in England, Scotland, Wales and Northern Ireland
- Free and no obligation
Already filled in a proposal form? Email it to us or send it on WhatsApp with any drawings you have and we will take it from there.
