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An indemnity agreement is a contract that provides protection against loss. It is often required for high-risk activities, like skydiving and bungee jumping, to safeguard businesses from liability. In the context of surety, it is a signed document between a principal and a surety, stating the principal will indemnify the surety in the event of a claim. Indemnification involves compensating for a loss; for instance, if a surety pays $20,000 on a claim, the principal must repay that amount. Generally, business owners must sign an indemnity agreement, and in some cases, this may also require spousal indemnity or a third-party witness.
