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Surety bonds are assumed to carry zero risk for the surety company who writes them, outlining the terms of the agreement between the principal, surety company, and obligee. An indemnity agreement is crucial in transferring risk from the indemnitor (principal) to the indemnity (surety company). This two-party contract ensures the surety company issues bonds confidently without suffering any loss, as the principal is responsible for reimbursing the surety company if a claim is filed against the bond.
