Who is responsible for loss in the case of a fidelity bond?

In the context of a fidelity bond, the surety is responsible for the loss. A fidelity bond is a type of insurance that protects an employer against losses caused by dishonest or fraudulent acts of employees. The surety provides the financial backing and guarantees that the loss experienced due to such acts will be covered up to the limit of the bond.

The principal, typically the employee or party whose actions are insured, is the one whose dishonest actions lead to the loss. The obligee, usually the employer or the entity in need of protection, receives the protection from the surety. The contractor generally does not play a role in fidelity bond scenarios unless they are the principal being bonded. Therefore, the responsibility for the financial compensation due to losses from employee dishonesty falls on the surety, which makes it the correct answer.