While a surety guarantees the performance of the principal to the owner/obligee, the bond principal remains liable for its original obligation. If the surety/ bonding company must perform its duty to the obligee regarding the principal’s contract, the principal is liable to reimburse the surety for that performance. Because many contracting firms do not have the capital to assure this repayment, most surety companies require a general agreement of indemnity (GAI) to be signed not only by the firm, but by individuals willing to support the firm. This might be the owner(s) of the firm, the spouse of the owner, a parent corporation or merely other individuals willing to put themselves on the line due to their belief in the firm. Under the GAI (sometimes called simply an indemnity agreement), the principal company and all people or other companies that sign are liable to repay the surety for amounts it pays on the company’s behalf. For more questions, please feel free to contact our bond experts at The ProSure Group.