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Surety bonds are assumed to carry no risk for the company issuing them. The bond details the agreement among the principal, surety company, and obligee, but lacks terms on the principal's reimbursement to the surety. This is where an indemnity agreement comes in, transferring risk from one party to another. In a surety bond indemnity agreement, the indemnitor assumes risk while the surety company is absolved of liability.
