What is a cross-indemnity?

Question

Im filling out a bonding application and need to know what that means?

Answer 1

Cross indemnity will come into play if there are mutliple entities involved with getting a Surety bond. For instance, if you own a company call Steve's Plumbing, but also have a company for air conditioning, you would probably be required to cross indeminfy the companies.

This simply means that if one company has financial difficulties, the other company will be financially responsible to help to the first company.

The main reason this is done is to take away the ability of someone moving all of the assets from a sinking company to the good company. Then when problems occur, they file bankruptcy for the sinking company, but all of thier assets are safe in the good company. With cross indemnity, it doesn't matter where the money is, it will be "on the table" for the surety.

One other example of cross indemnity is where two companies work together for one specific job or project. This is typcially considered a joint venture and will usually have a specific cross indemnity form (called a joint venture agreement) that lays out the details.

When in doubt, contact your attorney. If you want the bond, you will need to sign the form. Very few surety companies will give a bond without indemnity but you may be able to negotiate the cross indemnity aspects a little.

Good Luck

Answer 2

Cross Indemnity Agreement

Answer 3

It depends on the situation. Usually it means that parties agree to indemnify one another for losses in which they both participated.