Key facts
- Data centre legal disputes more than tripled between 2021 and the first half of 2026.
- 78% of the growth in liability cases for data centres over three years stemmed from noise and nuisance complaints.
- Data centre space near global conflict zones expanded significantly in 2025.
- Iranian drones struck five data centres in the UAE and Bahrain earlier this year.
- Single hyperscale data centre sites can carry insured values of up to $50 billion.
- 58% of all data centre capacity built since 1990 was delivered between 2020 and 2025.
The rapid expansion of data centres, driven by the global AI boom, is creating increasingly complex insurance risks that are outpacing existing coverage programs. These risks span construction, natural catastrophe, power supply, outages, cyber threats, and geopolitical conflict, with a single event potentially triggering claims across multiple insurance lines.
Legal disputes involving data centres have more than tripled, from four in all of 2021 to 14 in the first half of 2026, according to a Howden report. Planning and environmental disputes are primary drivers, with noise and nuisance complaints, including those related to diesel generator emissions and water consumption, accounting for 78% of the growth in liability cases over the past three years. Residents and regulators are increasingly pushing back against the sheer scale of infrastructure being built, with the UK's Ofgem raising concerns about speculative projects impacting the electricity network.
Geopolitical instability also poses a significant threat. Howden's research indicates that in 2025, data centre space located within 10–15km of active global conflict zones was equivalent to around 60% of the total recorded across the previous five years combined. This trend was highlighted earlier this year when five data centres in the UAE and Bahrain were struck by Iranian drones, marking the first known deliberate wartime targeting of commercial data centres. These attacks demonstrated how physical and digital risks are converging, blurring the lines between cyber, property, and war insurance.
Single hyperscale data centre sites in major European markets like London can now carry insured values of up to $50 billion. This concentration is forcing underwriters to price against maximum probable loss rather than total insured value. The pace of buildout, with approximately 58% of all data centre capacity since 1990 delivered between 2020 and 2025, means current insurance program structures may not be adequate for the evolving risks. Edward Howland Jackson of Howden emphasized the need for data centre operators, developers, and investors to understand risk concentrations and for the insurance market to adapt by using data and specialist advice to build greater resilience.