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An indemnity agreement provides protection against loss, particularly in high-risk activities like skydiving and bungee jumping, safeguarding 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 the event of a claim. Indemnification means reimbursing the surety for any claims paid out, such as repaying $20,000 if that amount is disbursed for a claim. Typically, all business owners need to sign an indemnity agreement; in some instances, only the top applicants are required to sign, and occasionally, spousal indemnity or a third-party witness may be necessary for signatures.
