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Surety bonds are issued with assumed zero risk for the surety company, outlining the terms of the agreement between principal, surety company, and obligee. The bond form typically lacks language regarding reimbursement to the surety, leading to the necessity of an indemnity agreement. This two-party contract is used by surety companies to transfer risk, with the indemnitor assuming risk and the indemnity absolved of liability. In surety bond indemnity agreements, the indemnitors are principals, and the surety companies are indemnities.
