Ransomware Payment Bans in 2026: What Every Business Needs to Know

The Payment Ban Landscape in 2026

The debate over ransomware payments has shifted from theory to law. Here’s where things stand:

U.S. State-Level Bans (As of January 2026)

International Bans

• Australia: Mandatory reporting, payment ban proposed for 2027
• UK: Ban under consideration; critical infrastructure guidance issued
• EU: NIS2 directive requires reporting; payment ban debated

How These Laws Actually Work

What’s Typically Banned

Most ransomware payment ban laws:

1. Prohibit direct payments to ransomware attackers
2. Require incident reporting within 24-72 hours
3. Mandate law enforcement notification before any payment consideration
4. Include penalties ranging from fines to criminal liability

Common Exceptions

Many laws include exceptions for:

• Imminent threat to life (healthcare, critical infrastructure)
• National security considerations
• Pre-approved payments by law enforcement
• Payments made before effective date

Penalties for Violations

Impact on Cyber Insurance

What Changes Immediately

If you’re in a jurisdiction with a payment ban:

1. Ransom reimbursement coverage is void – Insurers won’t (and can’t) reimburse illegal payments
2. Incident response must change – Your IR plan needs updating
3. Coverage focus shifts – Business interruption and recovery become primary

What Insurers Are Doing

Policy changes in 2026:

• Geographic exclusions for payment coverage in ban states
• Enhanced recovery coverage to offset payment restrictions
• Incident response panel updates to include legal expertise on payment laws
• Premium adjustments based on jurisdiction and exposure

The Silver Lining for Coverage

With payment off the table, insurers are enhancing other coverages:

How Incident Response Changes

The Old Playbook (Pre-Ban)

1. Incident detected
2. Forensics begins
3. Business impact assessed
4. Payment decision made
5. Negotiate and pay (or don’t)
6. Recover systems

The New Playbook (2026)

1. Incident detected
2. Notify law enforcement immediately (required)
3. Forensics begins
4. Legal review of payment options (is it even legal?)
5. Report to regulators (24-72 hour window)
6. Recovery-first approach – restore from backups
7. Business continuity activation
8. Post-incident review and reporting

Critical Time Windows

What You Need to Do Now

1. Know Your Legal Exposure

• Where are you incorporated?
• Where do you operate?
• Where are your employees?
• Where is your data stored?

Multiple jurisdictions may apply. If any of them ban payments, you’re affected.

2. Update Your Incident Response Plan

Your IR plan must now include:

• Legal counsel contact familiar with payment laws
• Law enforcement contacts by jurisdiction
• Reporting procedures and timelines
• Recovery-first procedures that don’t assume payment is an option

3. Invest in Recovery Capabilities

With payment potentially illegal, recovery is everything:

• Tested backups – Not just “we have backups” but “we can restore in X hours”
• Offline backup copies – Air-gapped from network
• Recovery time objectives – Know exactly how long restoration takes
• Business continuity plans – How do you operate during recovery?

4. Review Your Insurance

Contact your broker about:

• How do payment bans affect your coverage?
• What enhanced recovery coverage is available?
• Are your policy limits adequate for longer recovery periods?
• What legal services does your policy include?

Special Considerations by Industry

Healthcare

Payment bans often exempt “threat to life” scenarios, but:

• Documentation requirements are strict
• Law enforcement must be involved
• Approval processes take time you may not have

Recommendation: Invest heavily in recovery capabilities. You can’t rely on exceptions.

Government & Public Sector

You’re the primary target of these laws:

• No exceptions in most cases
• Personal liability for officials who authorize payments
• Contract implications for vendors

Recommendation: Zero tolerance for ransomware. Prevention and recovery only.

Critical Infrastructure

Mixed regulations apply:

• CISA reporting required
• State laws may prohibit payment
• Federal guidance allows case-by-case decisions

Recommendation: Work with legal counsel before any incident occurs.

The Future of Ransomware Response

Expert Predictions for 2026-2027

1. More states will enact bans – Momentum is building
2. Federal legislation possible – Bipartisan support growing
3. Insurers will adapt – Recovery-focused products will emerge
4. Attack patterns may shift – Data extortion vs. encryption

Preparing for Any Outcome

Regardless of where payment laws go:

• ✅ Strong backups protect you either way
• ✅ Good security prevents attacks regardless of payment options
• ✅ Incident response planning is essential
• ✅ Adequate insurance covers recovery even without payment

The Bottom Line

Ransomware payment bans are here and spreading. Whether you agree with them or not, they’re reshaping how businesses must respond to attacks and what insurance covers.

The businesses that will weather this change:

• Invested in prevention before attacks happen
• Built robust backup and recovery capabilities
• Updated incident response plans for the new reality
• Work with insurers who understand the changing landscape