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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 signed document between a principal and a surety, stating that the principal will indemnify the surety in the event of a claim. Indemnification means making the surety whole again; for instance, if the surety pays a claim of $20,000, the principal must repay the same amount. Typically, all business owners are required to sign an indemnity agreement, which may also necessitate spousal consent or a third-party signature in specific circumstances.
