Resource Library

Red Flags in Contracts

Coverage, Exclusions and Risk Management

Date: March 2020

MCIT members enter into a variety of contractual agreements ranging from leases, construction contracts and contracts for services. Language in contractual agreements may expose members to liability in a variety of ways, such as accepting all responsibility for the parties involved. If members are not careful, they could unintentionally assume unwanted liability. Contracts and risk management can be a tricky situation.

It is important for members to review legal agreements for potential risks—red flags—before finalizing agreements. MCIT can offer assistance to members reviewing contractual provisions in a number of areas, including insurance provisions, additional insured status, hold harmless and indemnification, waiver of subrogation, and property coverage.

Contractual agreement red flags discussed in this document are from a risk management perspective only; legal reviews of agreements should be completed by a member’s county attorney or legal counsel. Members are encouraged to follow their entities’ contract review processes and obtain the proper approval for agreements. This is to maximize the process for contracts and risk management.