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Surety bonds are initially perceived as zero-risk for the surety company issuing them, as they define the terms of the agreement between the principal, the surety, and the obligee, including the payout amount for claims. However, the bond typically lacks clauses 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 allows surety companies to transfer risk. In this context, the principal, or indemnitor, assumes the risk, while the surety company is absolved of liability. Thus, the indemnity agreement is vital for managing the financial exposure associated with issuing surety bonds.