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Surety bonds carry zero risk for the surety company, as outlined in the bond agreement. The agreement includes the amount the surety will pay if a claim is filed against the bond. However, the bond form typically does not address reimbursement to the surety. To confidently issue bonds without risk, an indemnity agreement is crucial. This two-party contract transfers risk from the indemnitor (principal) to the indemnity (surety company) in surety bond situations.
