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Surety bonds have zero risk for the company issuing them, as outlined in the bond terms. However, the bond form does not address the principal's reimbursement to the surety. This is where an indemnity agreement comes in, transferring risk from the principal to the surety company. In this agreement, the indemnitor assumes risk, while the indemnity is absolved of liability. A surety bond indemnity agreement is crucial for ensuring the surety company can issue bonds confidently without suffering losses.
