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An indemnity agreement provides protection against loss, commonly utilized in high-risk activities such as skydiving and bungee jumping to shield businesses from liability. In the context of surety, it is a signed document between a principal and a surety, stating that the principal will indemnify the surety in case of a claim. Indemnification refers to compensating the surety for any payout made on a claim, meaning if a surety pays $20,000, the principal must repay that amount. Generally, business owners must sign an indemnity agreement, though sometimes only top applicants are required to do so, and additional requirements may include spousal indemnity or a third-party witness to signatures.
