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Surety bonds are assumed to carry zero risk for the surety company. The bond outlines the agreement between the principal, surety company, and obligee. The bond form does not include language about reimbursement to the surety. Indemnity agreements transfer risk from one party to another. In a surety bond indemnity agreement, the indemnitor assumes the risk, while the surety company is absolved of liability. This allows the surety company to confidently issue surety bonds without expecting losses.
