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Surety bonds are assumed to carry zero risk for the surety company. The bond outlines terms between the principal, surety company, and obligee. However, it doesn't mention the principal's reimbursement to the surety. The key to issuing surety bonds confidently without loss is an indemnity agreement. This two-party contract transfers risk from the indemnitor (principal) to the indemnity (surety company). In surety bonds, the agreement ensures proper risk management.
