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An indemnity agreement provides protection against loss, particularly for high-risk activities like skydiving or bungee jumping, safeguarding businesses from liability. In the context of surety, it’s a document between a principal and a surety stating that the principal will indemnify the surety in the event of a claim. Indemnification involves compensating the surety to restore them financially; for instance, if the surety pays a $20,000 claim, the principal must repay this amount. Generally, business owners must sign an indemnity agreement, and in some cases, additional requirements like spousal indemnity or third-party witnesses may apply.
