The indemnity agreement obligates the named indemnitors to protect the surety company from any loss or expense caused by the contractors failure to fulfill its bonded obligation on the project(s) and any resultant loss under the surety bond. This gives the surety company some assurance that the contractor will use its talent and financial resources to resolve any difficulties that may arise in the performance of the bonded work.
It is commonplace throughout the industry to insist upon personal indemnity. Unlike a bank, the surety company is in an unsecured position, other than the rights afforded it through subrogation, so they are looking for the owner to personally commit to the endeavors of the corporation. The sureties also believe that because they risk their reputations and assets to guarantee the owner's promises, they feel that the owners should personally guarantee as well, the commitments they undertake through a bonded contract.