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Surety bonds carry zero risk for the surety company. The bond outlines terms between the principal, surety company, and obligee. The bond typically doesn't mention principal reimbursements. Indemnity agreements transfer risk from one party to another. In a surety bond indemnity agreement, the indemnitor assumes risk while the surety company is absolved of liability. The indemnity agreement is essential for surety companies to issue bonds confidently.
