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An indemnity agreement provides protection against loss, crucial for high-risk activities like skydiving and bungee jumping, allowing businesses to safeguard themselves from liability. In the context of surety, this agreement is a signed document between a principal and a surety, where the principal agrees to indemnify the surety in the event of a claim. Indemnification involves reimbursing the surety for any claims paid, such as repaying $20,000 if the surety fulfills a claim. Typically, all business owners are required to sign an indemnity agreement, though sometimes this may be limited to the best applicants or involve spousal indemnity or third-party witness signatures.