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An indemnity agreement serves to provide protection against loss, particularly in high-risk activities such as skydiving and bungee jumping. It helps businesses safeguard themselves from liability. In the context of surety, this agreement is a signed document between a principal and a surety, indicating that the principal will indemnify the surety in the event of a claim. Indemnification refers to the process of compensating the surety for any payout made, such as repaying $20,000 if the surety disburses that amount due to a claim. Typically, business owners need to sign an indemnity agreement, which may also require spousal indemnity or third-party witnesses to the signatures in some cases.