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An indemnity agreement provides protection against loss, commonly required in high-risk activities like skydiving and bungee jumping to shield businesses from liability. In the context of surety, it is a document between a principal and surety, stating that the principal will indemnify the surety if a claim arises. Indemnification involves repaying the surety for any payouts, such as $20,000 in claims. Business owners typically need to sign an indemnity agreement, and in some instances, it may also necessitate spousal indemnity or third-party witness signatures to validate the agreement.