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An indemnity agreement is a contract offering protection against loss. It's commonly used 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, wherein the principal agrees to indemnify the surety in case of a claim. Indemnification involves compensating the surety for any claims paid out, meaning if a surety pays $20,000 on a claim, the principal must reimburse that amount. Typically, all business owners are required to sign indemnity agreements, though sometimes only the best applicants do, and additional requirements may include spousal indemnity or a third-party witness for signatures.
