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An indemnity agreement provides protection against loss, primarily in high-risk activities like skydiving and bungee jumping, ensuring businesses are shielded from liability. It involves a signed document between a principal and a surety, where the principal agrees to indemnify the surety if a claim arises. Indemnification means restoring the surety to its original position; for instance, if a surety pays a claim of $20,000, the principal must repay that amount. Typically, all business owners need to sign an indemnity agreement, although sometimes only the most qualified applicants do so. The agreement may also necessitate spousal indemnity or a third-party witness to the signatures.