In early United States law, municipalities carried no liability for any consequences due to the improper performance of the services they offered. However, since that time, the municipality protection from liability began to slowly diminish until 1978 when a legal precedent was set allowing lawsuits against the municipal organization. The most visible service of the municipal government, and the one almost universally accepted as the biggest source of liability, is the construction and maintenance of traffic controls such as traffic signals and streets signs. The liability extended to any consequences related to traffic accidents that could be at all attributed to the improper construction of the traffic infrastructure.

However, municipalities offer a myriad of public services beyond traffic systems, each with its associated liability. For these many services, municipalities seek appropriate municipality insurance New York companies. The operation and control of the law enforcement agencies and their officers are one of the first services to fall under this umbrella. Under the current liability climate, a person can almost sue anybody for anything with limited consequences for frivolous lawsuits. From this perspective, police officers who enforce the law by dispensing traffic tickets are subject to a retaliatory response in the form of a lawsuit. The may eventually be ruled trivial or otherwise be dismissed, but in the meantime, precious resources are consumed during the defense of the officer, and his lost time in court. This is one example of the need for municipality insurance New York agencies to protect a city budget.