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An indemnity agreement provides protection against loss, particularly in high-risk activities like skydiving and bungee jumping, where businesses seek to limit their liability. In the context of surety, this agreement is a signed document between a principal and a surety, stating that the principal will compensate the surety if a claim occurs. Indemnification serves to restore the surety to its original financial state; for instance, if a surety pays a claim of $20,000, the principal must repay that amount. Generally, business owners must sign an indemnity agreement, which may also require spousal consent or a third-party witness, depending on the situation.
