You might have heard the term "indemnification" before, which means one party agrees to protect, or "hold harmless," another party from liability.
When it comes to surety bonds, indemnity agreements protect surety markets from losses. The individual or company that's bonded (also known as the "principal") is required to fulfill all obligations outlined within the bond form. If the principal fails to do so, the indemnity agreement transfers any claim loss liability from the surety market to the principal.
If a bond's obligation is considered risky and requires underwriting to determine pricing, indemnification must always be provided by the individual or company principal. If a bond's principal is a company, all legal owners must personally indemnify as well. Each indemnitor must provide a separate, unique signature.
Depending on the surety market's underwriting requirements, indemnitors can also include:
- spouses of company owners
- sister or parent companies associated with the principal
Although indemnification can sound confusing, SuretyBonds.com makes the process quick and easy by offering DocuSign digital signature completion to our clients. In rare situations involving large accounts, clients might need to sign a physical indemnity with full legal notarization.
If you have questions about indemnification or how to sign an indemnity agreement, call 1 (800) 308-4358 or email email@example.com, and one of our friendly representatives will be happy to walk you through the process.