Practical guidance for general contractors and specialty trades working on data centers, biolab retrofits, and corporate-campus projects from San Jose to Mountain View.
What’s Happening in 2025?
- Premiums up 10-18 % on the completed-operations portion of GL policies for large tech-campus work.
- Insurance limits rising: Apple, Google, and Supermicro projects now demanding $5 million per-occurrence / $5 million aggregate Umbrella Limits on their projects.
- New exclusions for electro-magnetic interference (EMI) and AI server thermal-event losses appear on many E&S forms.
- Broader indemnity clauses: Owners are pushing “type-I” indemnity, shifting almost all post-completion liability to contractors.
Why Are Rates Climbing Faster Than Material Costs?
- Claim severity spike. Construction-defect suits tied to water-intrusion and HVAC failures in server rooms rose 24 % statewide in 2024. Honigman Mid-Year Update
- Long tail exposure. California’s 10-year statute of repose (CCR §337.15) keeps carriers on the hook long after tech campuses go live.
- Reinsurance hard market. Global treaties for construction liability renewed at +10 % in Jan 2025, forcing carriers to raise rates. Honigman
- Shift from offices to labs. Conversions of empty offices to biolabs add higher sprinkler loads and specialized HVAC—more things to go wrong, higher rating factors. SF Chronicle
Who Gets Hit Hardest?
- Design-build GCs signing turnkey contracts that include MEP design liability.
- Subcontractors installing clean-room HVAC, fire suppression, or raised-floor systems; many carriers add project-specific CO aggregates.
- Start-ups and one-man LLCs without a documented QA/QC program—automatic debit modifiers raise premiums 15 %+.
Where Can You Still Find Savings?
- Wrap-ups (OCIP/CCIP). On multi-tower campuses, an owner-controlled program can cost less than stacking each sub’s standalone policy.
- Documented QA/QC. Photo logs of firestopping, BIM clash-detection reports, and leak-test certificates earn “superior workmanship” credits.
- Per-project aggregates. Negotiating per-project (instead of policy) aggregates prevents one defect claim from eating the full limit across multiple jobs.
- Higher deductibles, targeted. Boost the per-claim deductible from $5k→$25k only on the CO layer, not on premises-ops, to shave 5-7 % without risking day-one incidents.
When Should You Act?
- 120 days before renewal—large tech owners demand proof of CO limits before issuing bid invitations.
- Immediately after major QA upgrades (e.g., third-party envelope testing) to request mid-term credits.
- Before signing new master service agreements. Review indemnity language; AB 334 (2024) changed conflict-of-interest rules but did not relax indemnity obligations. Legiscan AB 334
How to Strengthen Your Bid Package
- Include a written thermal-management plan for AI server rooms—insurers see fewer HVAC defect claims when specs are documented.
- Provide BIM coordination files and clash reports to show proactive defect prevention.
- Show no-loss or low-loss runs for the past five years; segregate open vs. closed claims.
- Highlight subcontractor vetting: proof that every sub carries equal or higher CO limits.
Key Take-Aways for Silicon Valley Contractors
- Plan for double-digit liability hikes through at least 2026 on tech-campus projects.
- Wrap-ups, per-project aggregates, and rigorous QA/QC remain the best tools for clawing back premium credits.
- Early contract review of indemnity and insurance specs is cheaper than scrambling after bid award.
Sources
- Honigman – 2025 Construction Insurance Mid-Year Update
- California Assembly Bill 334 (2024) – Indemnity & Conflict-of-Interest Amendments
- San Francisco Chronicle – San Jose Office-to-Housing Conversions (Apr 2025)
- Construction Dive – Largest U.S. Commercial Starts, April 2025
- Insureon – San Jose Business-Insurance Cost Benchmarks (2025)
Need a line-item liability review? Inszone’s Silicon Valley construction team can analyze your completed-operations wording and identify hidden credits before bid day.
Nathan Wagner
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