What is an Indemnity Agreement?

Signing an indemnity agreement isn’t just an industry standard required to get your surety bond, it is a serious obligation that can cause you major financial harm if you don’t have a full understanding of what it means when you sign it.

Indemnity Agreements Put Your Assets on the Line

When you sign an indemnity agreement for your surety bond, you are signing a legally binding contract that says you’re responsible to pay claims that you cause up to the full bond amount (including legal costs). If you cause claims on your bond, your corporate and personal assets will be used to pay them. This is why it’s imperative that you avoid claims at all costs. Keep in mind, you can’t get a surety bond without signing an indemnity agreement.

Why Do You Have to Sign the Agreement?

Surety bonds are a form of credit to you provided by the surety company that guarantees you’ll pay any bond claims that you cause by not following the bond terms. If you cause claims, the surety company will pay them at first, but will come back to you for reimbursement. As mentioned above, the indemnity agreement you must sign is a legally binding contract that states you will pay the claims you cause.

A comparison that might make indemnity agreements and surety credit easier to understand is a home loan. They are similar in that you’re provided credit for both. The difference with a mortgage is your house is used as collateral; with a surety bond, you back your promise with your assets by signing an indemnity agreement. Read our guide to find out more about how surety bonds work.

Avoid Bond Agencies That Don’t Educate You

Some bond agencies are more concerned with providing surety bonds and moving on to the next sale as fast as possible without giving you the necessary information to ensure you’re protected from financial harm. If you’re currently working with a surety bond agent that hasn’t taken the time to explain how an indemnity agreement is a legally binding contract, how surety bonds work, what your bond guarantees or that you’re responsible for claims, it should be a big red flag to strongly reconsider working with them.

We Explain Everything You Must Know

Our company takes explaining and ensuring you understand how indemnity agreements, surety bonds and claims work very seriously. We want to build trust and a long term relationship with our clients. Additionally, our company name is tied to each bond we write, which means our reputation is on the line as well if we don’t take the time to educate our clients because claims could occur as a result. However, claims can happen even with the proper education on indemnity agreements and surety bonds. If claims are filed on your bond, we have a team of claims specialists that will defend you from paying false ones or more than you need for legitimate ones (unlike many other bond providers). Learn more about what makes JW Surety Bonds different.


Eric is an industry expert that specializes in taking complex surety concepts and explaining them in terms that make sense to the general public. He also manages the JW Surety Bonds website and works with various partners to help further educate the public on suretyship using various mediums.

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