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An indemnity agreement provides protection against loss, commonly used 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, stating that the principal will indemnify the surety if a claim arises. Indemnification involves reimbursing the surety for any claims paid out; for instance, if a surety pays $20,000 on a claim, the principal must repay that amount. Generally, business owners are required to sign an indemnity agreement, although sometimes only selected applicants do, and it may also require spousal indemnity or a third-party witness for signatures.
