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Surety bonds are assumed to involve zero risk for the issuing surety company, as they define the agreement terms between the principal, surety, and obligee, including payout amounts for claims. However, the bond typically lacks details regarding the principal’s reimbursement to the surety. This is where an indemnity agreement becomes crucial. An indemnity agreement is a two-party contract that transfers risk from one party (the indemnitor or principal) to another (the surety company), ensuring the surety is protected from potential losses. This agreement outlines the responsibilities of the parties involved and solidifies the surety’s position in the event of a claim.