Why It Matters For Data Centers
Tornado events can create material financial stress for data center operators across both construction and operations—especially when traditional property programs leave deductibles, waiting periods, exclusions, or sub-limits that constrain liquidity. Parametric insurance can complement those programs by providing funds quickly when a predefined trigger occurs.
This solution is designed for:
- Hyperscale and colocation facilities
- Edge facilities (close-to-user assets)
- Under-construction sites (DSU exposure)
- Adjacent power plants and related assets
Product Overview
- Geography: United States of America
- Coverage type: Single- or multi-location
- Policy period: Customized to client needs
- Limit: Up to $80M per contract
Why Choose Descartes’ Parametric Tornado Insurance for Data Centers
- Objective trigger (EF Scale + footprint): Payouts are based on EF intensity intersecting your insured area.
- Rapid liquidity: Designed to support operational continuity with a clear, predefined mechanism.
- Flexible use of proceeds: Can cover any economic loss, including business interruption (BI) and extra expenses (physical damage is not required).
- Single- or multi-location structures: Suitable for one site or a portfolio.
How It Works
1) Define your insured area (coverage polygon)
Underwriting proposes a polygon that encompasses the assets you want to insure. The polygon can be adjusted to reflect your operational footprint.
2) Measure the event using certified event data
After a tornado, Descartes overlays the NWS tornado footprint with your polygon to determine:
- The percentage of the coverage area impacted
- The EF intensity affecting that area
3) Apply the predefined payout structure
The payout is calculated using the agreed payout table by EF intensity and area impacted.
Interested in a solution?
Contact our commercial team.
FAQ
How do I get a quote, and what information do you need?
To provide terms, we typically request:
- Site locations (address or GPS coordinates)
- Loss history
- Policy limit
What is the claims process after a tornado?
1) The client notifies their broker, Descartes and/or risk carrier of the loss.
2) After the event, we collect the final data from the certification agent, ensuring the most accurate level of information to assess if the intensity of the event has triggered the policy and at what payout threshold.
3) Using the collected data, we then create an event report stating the maximum monetary amount to be recovered based on the structure outlined in the client’s policy.
4) After receipt of the event report, the client will issue a Declaration of Loss Statement to Descartes and/or the risk carrier.
5) As defined within the policy, after receipt of the Declaration of Loss Statement, the client will receive the payout in agreement with the policy terms, allowing them to accelerate continuity of operations.
How is the coverage area determined?
The coverage area is determined by taking the insured location(s) and adding a polygon encompassing the assets the client wants to insure. The exact polygon shape would be determined by Underwriting during the quoting process in collaboration with the broker and client. The client can adjust the proposed polygon to meet their needs.
How is a tornado policy triggered?
A policy is triggered when a tornado footprint passes within the coverage area with a damage intensity that meets the predefined threshold in the payout structure, as agreed upon in the policy.
How is the intensity of a tornado measured?
The National Weather Service (NWS, a division of NOAA), uses the Enhanced Fujita (EF) Scale to assign intensity ratings along the tornado’s path of destruction. The certification agent retrieves the tornado data published by the NWS and consolidates it, if needed, to have a complete EF-rated polygon that covers each portion of the tornado track.
How is the payout determined?
We overlay the tornado footprint provided by the National Weather Service with the coverage area, which reveals:
1) The portion of the coverage area that was affected.
2) The intensity rating at which it was impacted.
What types of damages are covered in a parametric policy?
A parametric policy covers any economic loss sustained from a triggering event including but not limited to property damage, business interruption, and extra expenses. There does not have to be direct physical damage to trigger coverage.
