Author: Municipal Finance Legal Guidance
This Ask DLS features frequently asked questions concerning municipal liability after cyber attacks. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.
Municipal officials arrive to work one day in the Town of Sleepy Hollow and find they were hit by a ransomware attack and that their servers as well as documents and emails were frozen or locked. Will standard municipal liability policies cover a cyber attack?
Municipal general liability policies exclude cyber attacks and digital data loss, and a bond only protects the municipality against internal theft. Public Entity Cyber Liability Insurance is necessary to protect the municipality.
Voluntary parting is a term that comes up in the context of municipal insurance and public risk management and is where an authorized municipal official hands over municipal funds to a scammer because they were deceived by a fraudulent scheme, trick, or false pretense.
Standard insurance policies typically deny coverage under a voluntary parting exclusion. A specialized social engineering fraud endorsement or a cyber liability policy that overrides this exclusion is needed to protect the municipality in those situations.
What else can be done by a municipality to be prepared?
In addition to having insurance for this type of event, develop plans for resilience that include strategies to recover as quickly as possible, including developing a secondary data storage facility. Municipalities can explore the Cybersecurity Health Check Program which provides no cost cybersecurity assessments for municipalities and school districts.
The assessments help to identify vulnerabilities, evaluate existing protections and better understand areas where systems and infrastructure may be at risk. See the Cybersecurity Health Check Program FAQ.
There are also Cybersecurity Remediation Grants that help communities move from assessment to action by funding high-priority cybersecurity improvements directly connected to findings from the Health Checks. The remediation grant is an initiative is led by the Executive Office of Technology Services and Security (EOTSS) in partnership with the Community Compact Cabinet (CCC).
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Editor: Dan Bertrand
Editorial Board: Sean Cronin, Scott Ditto, Janie Dretler, Jessica Ferry, Christopher Ketchen, Paula King, Jen McAllister, Brianna Ortiz and Tony Rassias
| Date published: | October 1, 2026 |
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