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An indemnity agreement provides protection against loss, particularly in high-risk activities like skydiving and bungee jumping, where businesses seek liability protection. It involves a signed document between a principal and a surety, stating that the principal will indemnify the surety if a claim arises. Indemnification refers to restoring the surety to its original position; for instance, if a surety pays $20,000 on a claim, the principal must reimburse this amount. Generally, all business owners must sign an indemnity agreement, though in some cases, only the strongest applicants are required to sign, which may also involve spousal indemnity or third-party witness signatures.
