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Indemnity refers to protection against loss, commonly utilized in high-risk activities like skydiving and bungee jumping, where participants sign indemnity agreements to shield the business from liability. In surety, an indemnity agreement is a document between a principal and a surety, obligating the principal to indemnify the surety in the event of a claim. Indemnification means restoring the surety to its original position, such as when a principal repays a surety $20,000 after a claim payout. Most business owners are required to sign indemnity agreements, which may sometimes involve spousal indemnity or a third-party witness to the signatures.
