Data Center Late Fees Hit $5 Million or More Per Day, Spawning New Insurance

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This spring, Mike Mathews, who leads the global digital infrastructure practice at insurance broker Marsh, raced to design a policy to protect a data center developer from a $1 million-a-day late fee. The developer’s tenant was demanding damages if electricity and facilities weren’t available on time during the first phase of a new gigawatt-scale facility. Mathews’ team arranged the novel coverage, a bespoke form of “delay-in-delivery” coverage just for data centers, only to see penalties escalate sharply in a matter of months: Tenants in new deals began asking for upwards of $5 million for each day of delay, citing even higher estimates of lost revenue.

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