What Is Indemnity? To indemnify means to make whole. Under common law, the surety company has the right to be indemnified by the principal in the event of a loss. The General Indemnity Agreement (GIA) enforces that right by stipulating that if the surety suffers a loss while providing a bond to the principal, the principal is obligated to make the surety "whole" by reimbursing any losses and expenses. If the principal is a closely held corporation or partnership, the individual owners and their spouses may be asked to personally indemnify the bond. Personal indemnification demonstrates the principal's personal commitment to the business entity and to the surety company.
To indemnify means to make whole. Under common law, the surety company has the right to be indemnified by the principal in the event of a loss. The General Indemnity Agreement (GIA) enforces that right by stipulating that if the surety suffers a loss while providing a bond to the principal, the principal is obligated to make the surety "whole" by reimbursing any losses and expenses. If the principal is a closely held corporation or partnership, the individual owners and their spouses may be asked to personally indemnify the bond. Personal indemnification demonstrates the principal's personal commitment to the business entity and to the surety company.
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