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An indemnity agreement provides protection against loss, particularly in high-risk activities like skydiving and bungee jumping. It protects businesses from liability. In the context of surety, an indemnity agreement is a document between a principal and a surety, stating that the principal will indemnify the surety if a claim arises. Indemnification means restoring the surety to their original position; for example, if the surety pays a claim of $20,000, the principal must repay that amount. Typically, business owners need to sign an indemnity agreement, although sometimes only the best applicants do. In certain cases, spousal indemnity or a third-party witness to all signatures may be required.
