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Surety bonds are seen as carrying zero risk for the company issuing them. The bond details the agreement between the principal, surety company, and obligee. While the bond states the surety will pay out on behalf of the principal if needed, it typically doesn't address reimbursement to the surety. This is where an indemnity agreement comes in, transferring risk from the principal to the surety company. The indemnity agreement is a two-party contract, with the principal assuming the risk and the surety company being absolved of liability.