What is an indemnity agreement?
An indemnity agreement is a promises that you will pay the surety company back if a claim is paid out as well as any court costs associated with the claim.
Who needs to be indemnified to the bond?
The majority percentage owner of the company or the individual obtaining the bond is the one that needs to be indemnified to the surety bond. This is because this person, the principal is held personally responsible for any bond claims that are paid out.
Please note: There are special circumstances in which another officer can sign as the indemnitor as long as they are aware they are being held personally responsible for any bond claims paid out by the surety company.
Why do I need to sign twice?
If you are signing as a corporation the surety company also requires the principal (entity obtaining the bond) to sign individually as well. This is to protect the surety company in case the business closes so that they will still be able to obtain payment for a claim.
What about my partner?
Any owner in the company that has more than 20% ownership will need to be indemnified on the bond. This is to ensure extra protection for the surety company in case the principal is unable to be located or the company changes ownership.
What if I’m not a US Citizen?
If the majority owner of the company is not a US citizen, we can sometimes have another officer sign for the surety bond as the indemnitor. Otherwise, the surety company may require additional information in order to approve the bond.
What if there is no one with a ‘majority’ ownership stake in my corporation?
The surety company may require all officers to sign the indemnity, or may just require one depending on the situation. In rare situations, the surety company may waive personal indemnity and have the president sign for the company only.
What if we are a non-profit?
The person responsible for the non-profit would have to sign as the indemnitor.