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An indemnity agreement serves as protection against loss, commonly used in high-risk activities like skydiving or bungee jumping to shield businesses from liability. It involves a signed document between a principal and a surety, where the principal agrees to indemnify the surety in case of a claim. Indemnification restores the surety to its original position; for instance, if a surety covers a claim for $20,000, the principal must reimburse that amount. Typically, all business owners sign indemnity agreements, though sometimes only the best applicants do. In certain cases, the agreement may require spousal indemnity or a third-party witness for all signatures.
