The most common coverage type, these policies are only triggered by fault or negligence of the warehouseman. If there is a proven fault by the warehouseman, your goods will be covered by the policy, subject to terms and conditions. For occurrences not due to the negligence of the warehouseman, such as acts of God, your goods will probably not be protected by the policy. Furthermore, in the event of a claim, your coverage amount may be less than the full value of the equipment in storage. Often buried in the warehousing agreement is a clause stating that claims are limited to a low specified amount per pound or a “multiple of the monthly rent” for the stored item.

WLL coverage was designed for the broader warehousing industry, where it works reasonably well for general palletized, bulk, or commodity items. When storing high-value, mission-critical equipment associated with data centers, under WLL policies, your property may be underinsured in both breadth of coverage and value, even if the coverage is triggered.

PPO coverage is “all-risk insurance,” subject to policy terms and conditions – it covers your goods and does not need fault as a trigger for the coverage to apply.  This increased level of protection is roughly 3x more expensive for the warehouseman to carry than WLL insurance, meaning it is less common in the industry and is typically procured with lower coverage limits than required for storing data center equipment.

Reviewing the warehousing agreement is also critical with PPO coverage. The policy may have exclusions (e.g., flood damage may be excluded if the warehouse is in a flood zone). The stated coverage amount may apply to a collection of warehouses rather than the individual building where your equipment would be stored (meaning if losses exceed the coverage value, they will be shared across a broader pool and may further reduce the amount you recover.) Finally, PPO policies can be written per occurrence or in the aggregate, drastically changing the way you should view whether the amount of coverage the warehouseman procures is sufficient for your stored equipment.

Note that sometimes the warehouseman will have both WLL and PPO and will use the WLL when triggered, refraining from using the more expensive PPO unless needed.

‘First Party’ coverage can be obtained to cover stored equipment at full value regardless of what other property is being stored in the warehouse. This type of coverage will almost always result in additional charges since it requires a change or endorsement of the warehouseman’s existing policies.

Another avenue of supplemental coverage could be the Owners (or GC/EPC) Builders Risk policy for the project.  These policies often (but not always) have an offsite storage component that might be used. Coverage limits for these policies are typically not high and may be inadequate for high-value equipment. The coverage may also require that storage locations be specifically identified and referenced in the policy for the coverage to apply.

Understanding the type(s) of insurance coverage offered by a warehouseman is crucial to getting comfortable with the risks of storing high-value, mission-critical equipment. However, mitigating risk goes beyond having adequate insurance. Warehouse providers specializing in data center equipment should provide you with imaging of visual external inspections and automated receipts upon delivery. If the stored equipment will eventually be transported, rigged, and set on a project site, consider using a provider capable of performing all those services. Minimizing the number of times different parties handle your equipment and having a single point of contact that is responsible for the care, custody, and control of your equipment from the moment it is received in storage to when it is set on the project site, helps eliminate third party risk and reduces the administrative burden of having to manage multiple vendors.

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