surety bond indemnity agreement

What is a Surety Bond?

A surety bond is a three-party agreement between a Principal, an Obligee, and a Surety.

  • Principal: person who needs the surety bond
  • Obligee: person who requires the bond and is protected by the bond
  • Surety: person who issues the bond

In short, a surety bond is a contract that guarantees you will fulfill your tasks and obligations.

If the you (the principal) fails to fulfill your obligations, the surety company will step in. In the end, you remains liable for the original obligation and must repay the surety company for any money they paid out.

In order to make this arrangement clear and legal, surety companies require that principals sign an Indemnity Agreement.

What is a Surety Bond Indemnity Agreement?

A surety bond indemnity agreement is a signed agreement between the Principal and the Surety that states the Principal will  “indemnify” the surety company should a claim occur.

Indemnification is the process of bringing the surety company back to where they started, financially.

For example, if a surety pays out $20,000 for a bond claim, the principal indemnifies the surety by repaying them $20,000.

For this reason, some people define surety bonds as “borrowing the balance sheet of the surety company for the purpose of a contract.” 


View a sample Indemnity Agreement

Who Needs to Sign a Surety Bond Indemnity Agreement?

If you are the principal listed on the surety bond, you will need to sign an Indemnity Agreement.

Sometimes, additional people might need to sign the Indemnity Agreement, like other owners of the company or spouses.

A lot of people ask why their spouse must sign their indemnity agreement. One reason is that if the Surety has to pay out on a claim, they don’t want you to transfer all your assets to your spouse to get out of reimbursing them. So, the Surety oftentimes requires spouses to sign the indemnity agreement.

All surety Indemnity Agreements are different though:

  • Some sureties require only a signature from the best applicant (HCC, BTIS/WESCO).
  • Some do not require spousal indemnity at all (example WIIC HTP (nonstandard)).
  • Some Indemnity Agreement forms have a place for Social Security Number to be listed.
  • Some have an unrelated (3rd party) to sign as witness next to every signature.

**Many principals submit half completed Indemnity Agreement with only one signature, or missing witnesses, missing SS#s or the signed by date. Some purposely leave off the spouse’s signature. This avoidance merely slows the process as there is no way around the required signatures.**

surety bond indemnity agreement

Who is Required to Pay Should a Claim Occur?

If a surety company pays out on a bond claim Under they will require compensation from the person listed in the Indemnity Agreement.

Under an Indemnity Agreement, the principal and all other persons who signed the Indemnity Agreement are liable to repay the surety company for every penny.

How to Complete an Indemnity Agreement

In order to ensure that the indemnity agreement is property completed, follow the guidelines below:


Step #1: Get all the appropriate signatures:

• If signing as a Corporate Indemnitor, the entity signature section should be signed by an authorized officer of the company, typically the President of the corporation.
• If signing as an LLC Indemnitor, the entity signature section should be signed by an authorized member or manager of the LLC.
• If signing as Partnership Indemnitor, the entity signature section should be signed by an authorized partner of the Partnership, typically the General Partner.
• If signing as a Sole Proprietorship Indemnitor, the entity signature section should be signed by the owner.
• If signing as an Individual Indemnitor, the individual signature section should be signed by the individual Indemnitor.
• Make sure any required “witness” or “attest” signatures are also properly filled out.


Step #2: Return the signed Indemnity Agreement to the surety company

Most companies require the surety bond indemnity agreement to be returned to them within two (2) weeks of the surety bond purchase.

If the indemnity is not returned it could result in cancellation of the bond.


If you have questions about filling out one of Surety Solutions’ Indemnity Agreement, contact a Customer Service Agent toll free at 866.722.9239.

We can also be reached via fax at 503-566-5891 or by email at

If you lost your Indemnity Agreement, we have Indemnity Agreements available on our website, under Forms.

Contact Surety Solutions

Related Posts

Surety Bond Frequently Asked Questions

How Much Does a Surety Bond Cost? 

The Important Connection Between Your Credit Score and Surety Bond 

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