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Surety bonds have zero risk for the company issuing them, outlining terms between principal, surety, and obligee. Bonds do not typically mention principal reimbursement. Indemnity agreements are crucial for surety companies to transfer risk. In these agreements, the principal assumes risk while the surety company is absolved of liability. An indemnity agreement is a two-party contract used in surety bonds to transfer risk from one party to another.
