Glossary

General indemnity agreement

The contract in which a bonded business, and usually its owners, promise to reimburse a surety for any bond losses and costs.

Also called: GIA, indemnity agreement, surety indemnity agreement

A general indemnity agreement (GIA) is the document that makes surety different from insurance. Before a surety writes bonds for a contractor or other business, the principal signs a GIA promising to reimburse the surety for every dollar it pays out on a claim, plus legal fees and expenses. The surety is guaranteeing the principal's performance, not taking its risk.

Most GIAs are signed by the company, its owners and often their spouses, and the liability is joint and several, so the surety can pursue personal assets. Typical terms let the surety demand collateral on request, take over contract funds and equipment, complete the work or hire a contractor to do so, settle claims in good faith and recover its costs, and keep the indemnity in force across every bond issued, not just one. Terms are heavily weighted toward the surety, and the surety's discretion is broad.

Read it before signing, with an attorney. Owners should know that a single bond claim can reach their home and savings, that exiting the agreement does not erase bonds already issued, and that new partners or entities may need to sign. Underwriters decide capacity partly on the owners' personal financials because of this. The guide on surety bonds explained: how they differ from insurance covers how bonds work, and surety bond defines the product.

Last reviewed October 10, 2026

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Related terms

Surety bond A three-party guarantee in which a surety promises an obligee that a principal will perform or pay, with the principal bound to repay the surety for any loss. Bonding capacity The most bonded work a surety will back for a contractor, set as a limit per project and a total for all uncompleted bonded jobs. Bid bond A surety bond guaranteeing that a contractor who wins a bid will sign the contract and furnish the required performance and payment bonds. Performance bond A surety bond guaranteeing a contractor will finish a project under its contract; if it defaults, the surety completes the work or pays the owner. Indemnity The principle that insurance restores your financial position after a loss, no better and no worse; also a contract promise to make good another's loss.

Related guides

Bid, performance and payment bonds: how contract surety works Bid, performance and payment bonds guarantee construction work. What each covers, the federal and state rules, and how subcontractors and suppliers claim. License and permit bonds: who needs one and how they work A license or permit bond is a surety guarantee a government requires before licensing you. Real amounts, how claims work, and what a lapse does to the license. What a surety bond costs and how it is priced Surety premium is a rate on the bond amount, set by your credit and financial strength. How contract and license bonds are priced and how to lower the rate. Surety bonds explained: how they differ from insurance A surety bond is a three-party guarantee you must repay if the surety pays. How bonds differ from insurance, the parties, the main types and how claims work.

Related tools

Surety bond cost calculator Estimates a surety bond premium from a flat rate or a tiered rate schedule, adjusted for credit and subject to a minimum premium. Example rates, not a quote.

Related en español

Fianzas de licencia y permiso: quién necesita una y cómo funcionan Una fianza de licencia o permiso es una garantía que el gobierno exige antes de otorgarle la licencia. Montos reales, cómo van los reclamos y qué pasa si vence. Fianzas de licitación, cumplimiento y pago: cómo funcionan en construcción Fianzas de licitación, cumplimiento y pago para obras: qué cubre cada una, reglas federales y estatales, y cómo reclaman subcontratistas y proveedores.