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Surety bonds are assumed to carry zero risk for the surety company. The bond outlines terms between the principal, surety company, and obligee. However, it doesn't mention the principal's reimbursement to the surety. An indemnity agreement is used to transfer risk from one party to another in a surety bond. The indemnitor assumes risk, while the indemnity is absolved of liability. This agreement allows surety companies to issue bonds confidently without expecting loss.
