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An indemnity agreement provides protection against loss, particularly in high-risk activities like skydiving and bungee jumping, to shield businesses from liability. In the context of surety, it is a contract between a principal and a surety, stating that the principal will indemnify the surety if a claim emerges. Indemnification refers to restoring the surety to its original financial state; for instance, if a surety pays $20,000 on a claim, the principal must reimburse that amount. Typically, all business owners are required to sign an indemnity agreement, though sometimes it might only apply to the best applicants, or may necessitate spousal indemnity or third-party witness signatures.
