Insurance for the liability of housing someone else's equipment
The global data center colocation market is estimated at $99.2 billion in 2026, growing to $184.4 billion by 2033. Colocation creates a unique liability relationship, and coverage should reflect who owns the equipment and who is responsible if something goes wrong.
Built for both operators and tenants.
What insurance do colocation operators and tenants need?
Colocation operators need general liability, property, bailee or warehouseman's liability for tenant equipment, cyber and business interruption coverage. Tenants need their own property coverage, because the operator's policy usually covers the facility and the contract often caps operator liability far below equipment value. Alton Risk places coverage for both sides.
Where colocation liability actually breaks down
A colocation contract, not just the insurance policy, sets who is exposed when equipment is damaged, and the gap is often bigger than either party expects.
Estimated size of the global data center colocation market in 2026, growing at a 9.3% CAGR to $184.4B by 2033, distinct from the hyperscale and owned-facility market.
Grand View Research, 2026
Length of a November 2025 chiller failure at a colocation facility that halted CME Group trading, an illustration of how a single mechanical failure cascades to tenant operations.
Industry reporting, Sept 2026
Share of hardware value that can end up covered when a colocation contract caps operator liability at a few months' fees, far below the replacement cost of high-value equipment.
Bailee liability analysis, 2026
Sources: Grand View Research, Data Center Colocation Market Report · Amwins, Unpacking Warehouse Legal Liability · IRMI, Warehouse Operators Legal Liability Insurance.
A bindable quote in three steps
Built for both sides of the colocation relationship.
Tell us whether you are the operator or the tenant.
Select liability and property limits that match your role and your actual equipment value.
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Close the gap your colocation contract leaves open
Coverage for both operators and tenants
Five lines addressing the specific liability gap a colocation contract can leave open.
General Liability
Third-party bodily injury or property damage claims at the facility.
Property
Physical damage to the building, tenant equipment, or shared infrastructure, depending on your role.
Bailee/Warehouseman's Liability
Liability for damage to property you are responsible for but do not own, the core operator exposure, and often capped far below actual equipment value by the colocation contract itself.
Cyber Liability
Data breach and network security coverage for the facility or the equipment it houses.
Business Interruption
Lost income if an outage, like a chiller or power failure, takes the facility offline.
Common questions from colocation operators and tenants
Who is liable if equipment is damaged in a colocation facility?
Liability typically depends on the colocation agreement's terms, so both operators and tenants should carry matched coverage. Contracts often cap the operator's liability well below the equipment's actual replacement value.
What is bailee liability and why does it matter for colocation?
It covers damage to property you are responsible for but do not own. It is relevant for operators housing tenant equipment, and it is underwritten on a negligence-based standard of care, not strict liability.
Do colocation tenants need their own policy, or does the operator's cover them?
Tenants generally need their own coverage for their equipment. The operator's policy typically covers the facility, not tenant hardware, and the colocation contract usually caps how much of a tenant's loss the operator is on the hook for.
How big can the coverage gap actually get?
Large. A colocation contract that caps operator liability at a few months' fees can leave well under 5% of a tenant's hardware value covered in a total-loss scenario, which is why tenants carrying high-value equipment need their own property coverage.
What does colocation insurance typically include?
A typical program combines general liability, property, bailee liability, cyber liability and business interruption, structured around whether you are the operator or the tenant.
Who places colocation insurance at Alton Risk?
Alton Risk is a commercial insurance brokerage founded in 2026 by former carrier-side underwriters. It places liability and property coverage for colocation operators and tenants with specialist markets.
Built by operators, not outsiders
Alton Risk Insurance Services is a commercial insurance brokerage for companies building the future. It was founded in 2026 by Sophia Zaller, and the carrier-side underwriting experience behind our placements is the reason we know what a market will and will not accept. Technology speeds up our work, and the judgment comes from people who have priced and placed these risks.
Also serving data center operators and emerging technology companies at insuredatacenter.com and insureemergingtech.com.
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