What type of insurance provides protection against loss due to non-performance of a contract?

The correct answer is performance bond, which specifically addresses the protection against loss resulting from non-performance of a contract. A performance bond is a guarantee provided by a surety company that the contractual obligations of one party will be fulfilled according to the terms specified. It essentially assures the other party in the contract that if the obligor fails to complete the work or meet the contract requirements, the surety will either compensate the affected party or ensure that the obligations are completed.

In contrast, liability insurance primarily covers legal liabilities for bodily injury or property damage caused to third parties, and thus does not focus on contractual performance. Property insurance protects against loss due to damage or destruction of physical assets but does not cover contractual breaches. Health insurance provides coverage for medical expenses, which is unrelated to contractual non-performance issues. Performance bonds are distinct in their role of ensuring contract fulfillment, making them uniquely suited for the scenario presented in the question.