What are the two types of bonds used in insurance?

The correct answer is that the two types of bonds used in insurance are Fidelity and Surety bonds. Fidelity bonds provide protection against losses caused by dishonest acts of employees, such as theft or fraud. They are designed to safeguard the interests of the employer by ensuring that they can recover losses resulting from employee dishonesty.

Surety bonds, on the other hand, are agreements between three parties: the obligee (who requires the bond), the principal (who purchases the bond), and the surety (the company that issues the bond). These bonds are often used to guarantee the performance of a contract or the compliance with laws and regulations, providing assurance that the principal will meet their obligations.

The other options do not accurately describe the types of bonds used in the insurance field. Contract and Performance refer to the nature of obligations that might be guaranteed through surety bonds, but they do not constitute types of bonds themselves. Life and Health and Property and Casualty refer to categories of insurance policies rather than bonds.