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An indemnity agreement serves as protection against loss, often required in high-risk activities like 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, stipulating that the principal will indemnify the surety in case of a claim. Indemnification involves reimbursing the surety for any amounts paid out, such as repaying $20,000 if the surety covers a claim of that amount. Most business owners must sign an indemnity agreement, though sometimes only the best applicants need to, and it may include requirements for spousal indemnity or third-party witness signatures.
