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An indemnity agreement provides protection against loss. It is often required for high-risk activities like skydiving and bungee jumping to protect businesses from liability. In terms of surety, an indemnity agreement is a signed document between a principal and a surety, stating that the principal will indemnify the surety in the event of a claim. Indemnification involves reimbursing the surety for any payouts, such as a principal repaying $20,000 if the surety covers a claim of that amount. Generally, all business owners will be required to sign an indemnity agreement, and in some cases, additional requirements like spousal indemnity or third-party witnesses may be necessary.
