What is an indemnity bond?

An indemnity bond, also known as a surety bond, is a type of financial contract that guarantees one party will fulfill their obligations or compensate another party if they fail to do so.

Indemnity bonds are commonly used in business transactions, construction projects, government contracts, and legal proceedings to provide financial protection and assurance to the parties involved.

The party providing the bond (known as the surety) agrees to pay a specified amount of money to the other party (the obligee) in the event that the principal party (the person or entity whose actions are guaranteed by the bond) fails to fulfill their obligations.

Indemnity bonds are often required by law or by a contract in order to protect the interests of individuals, businesses, or government entities. The terms and conditions of an indemnity bond can vary depending on the specific circumstances and requirements of the parties involved.

Overall, an indemnity bond serves as a form of insurance to safeguard against potential financial losses resulting from non-performance or breaches of contract.