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Surety bonds are assumed to have zero risk for the company issuing them, with the bond outlining terms and payment responsibilities. The key to this confidence is an indemnity agreement, a contract that transfers risk from one party to another. In a surety bond indemnity agreement, the indemnitor (or principal) assumes risk while the indemnity (or surety company) is absolved of liability. This agreement ensures that the surety company can issue bonds without suffering losses.
