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Surety bonds carry zero risk for the surety company issuing them. The bond outlines terms between the principal, surety, and obligee. If a claim is filed, the surety pays on behalf of the principal. The bond form doesn't mention the principal reimbursing the surety. An indemnity agreement is crucial in this situation, transferring risk from the principal to the surety company. The indemnity agreement is a two-party contract where the principal assumes the risk, and the surety company is absolved of liability.