A key difference between bonding and insurance is that in the event of a paid claim, the bond company will look to you to reimburse them. Essentially, an indemnity agreement is an agreement between the contractor and the surety bond company which says that in the event of a paid claim on a contract surety bond, the contractor will reimburse the bond company for the amount of the loss plus any other expenses incurred from the default.
Any and all bond facilities are written with indemnity agreements in place. The indemnity can be corporate, personal by the shareholders and sometimes spouses of the shareholders will be required to indemnify. The surety companies will generally try to have as much indemnity as possible. It is the broker’s role to ensure that a reasonable indemnity is ultimately executed.