Investors funding massive data center projects are hitting a wall as insurers balk at covering facilities that cost tens of billions of dollars to build. KKR and Blackstone have walked away from data center debt deals because available insurance only covers partial replacement costs, according to industry sources. The problem has intensified as tech giants pour hundreds of billions into AI infrastructure.

Mega data centers designed for AI development are particularly vulnerable, with facilities consuming over one gigawatt of energy—enough to power 1 million homes. Many projects now rely on "maximum foreseeable loss" coverage rather than full replacement insurance. Meta's $30 billion Hyperion campus in Louisiana secured just $4 billion in coverage, highlighting the gap between project value and available protection.

Insurance brokers report that rapid growth in data center size and value has outstripped the market's capacity to provide adequate coverage. While companies like Chubb, Swiss Re, and Zurich offer some protection, they limit exposure on single sites due to concerns about power and water supply disruptions. The situation could complicate future refinancing in the asset-backed securities market, where credit rating agencies typically demand high insurance coverage levels.