Insurance and Risk Management -2022

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Contract Basics

The Contract

Good risk management practice often will attempt to transfer the risk of accidental loss through contracts for both goods and services. Usually, California State University, Northridge requires the other party to a contract (contractor) to assume their fair share of liability arising out of the activity described in the contract. This transfer generally is appropriate, as the contractor is most often the party in the best position to control loss. However, poorly worded contracts may have just the opposite result by putting the burden of more risk on the University. That is why all University contracts with outside entities are processed through the Purchasing & Contracts Administration. All vendors and contractors who wish to do business with the University should contact Purchasing and Contracts Administration and review the Vendors & Contractors Guide on their website.


The insurance clauses in contract and agreements are intended to transfer risk by requiring suppliers, contractors, tenants, and users of public facilities (i.e. the “other party” to most University/Auxiliary Organization contracts) to protect themselves and the University/Auxiliary against claims or judgments arising from their products, activities or use of our facilities. Usually, the best way to assure that the transfer actually takes place (i.e. that the loss will be paid by someone other than the University/Auxiliary Organization) is to require insurance. That insurance should also protect the State of California, the Trustees of the California State University, the University, and the officers, employees, representatives, volunteers, and agents of each of them. See the Risk Management website for insurance requirements details.