Surety Bonds 101 - Indemnity and the Agreement

  • Indemnity is a written obligation expressed by the signature of the individual executing the Indemnity agreement on behalf of themselves and their Company or Companies.
    • AKA
      • Indemnity Agreement (IA)
      • General Indemnity Agreement (GIA)
      • General Agreement of Indemnity (GAI)
  • Verbiage is centric to the surety in order to allow for collection efforts in the event of a paid out claim paired with failure of the indemnitor to indemnify and hold harmless the Surety Company.

 

  • Business/Corporate Indemnity
    • Provides a collection avenue to the assets of the business/corporation
  • Individual Indemnity & Spousal Indemnity
    • Provides a collection avenue to the assets of the individual indemnitor(s)
    • Spousal indemnity required in order to allow access to their sole and separate assets, any assets that they may have converted to their assets from their spouse or the company
  • Waived Indemnity
    • Rarely occurs, usually Individual Indemnity is waived on publically traded companies or on event where the bond is fully collateralized.
  • Implied Indemnity
    • Occurs when the principal receives the benefit of the bond without signing an agreement. They benefit and therefore there is an implied offsetting agreement to hold the surety harmless.