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An indemnity agreement provides protection against loss and is commonly required for high-risk activities, such as skydiving and bungee jumping, to shield businesses from liability. In surety contexts, 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 they pay out. For example, if a surety pays a $20,000 claim, the principal must repay that amount. Generally, all business owners must sign an indemnity agreement, though under certain circumstances only the best applicants may need to sign, or it may also require spousal indemnity or third-party signatures.
