Payment Bond
A payment bond is a type of surety bond issued to contractors that guarantees all entities involved with the project will be paid.
A payment bond is typically required in construction projects — especially public ones — to ensure everyone gets paid fairly.
Key Highlights
- Payment bonds are also called construction bonds and labor and material bonds, and in government contracting are referred to as Miller Act bonds.
- A payment bond is a legal contract that guarantees certain employees, subcontractors and suppliers are protected against non-payment.
- They are often required in conjunction with performance bonds and are crucial for jobs on public property.
How do I purchase a payment bond?
NFP, the nation's largest and most reliable surety company, is authorized to issue payment bonds in each of the 50 states. We can provide the best rates for your bond, as well as the fastest issuance, to get your business off and running.
Our short online application makes it easy. Click below to start the application process today.
Payment Bond FAQs
A payment bond is a type of surety bond used in construction projects to guarantee that a contractor will pay their subcontractors, laborers, and material suppliers as agreed.
A payment bond is typically required in construction projects — especially public ones — to ensure everyone gets paid fairly. Here's who usually needs one:
- Contractors (general or prime contractors)
- Subcontractors (in some cases)
- Government agencies / public project owners
Payment bonds are issued by surety companies, which evaluate the capacity and financial history of the contractor before issuing the bond.
A payment bond is not usually required:
- On private projects, payment bonds aren’t always mandatory — but some owners still request them as extra protection.
- For small-scale projects, they might not be needed at all.
A payment bond and a performance bond are both types of contract surety bonds commonly used in construction projects, but they serve different purposes.
Payment Bond |
Performance Bond |
|
|---|---|---|
Protects |
Subcontractors, suppliers |
Project owner |
Guarantees |
Payment for labor and materials |
Completion of the project |
Claimants |
Subcontractors, suppliers |
Project owner |
Trigger |
Non-payment by contractor |
Non-performance or default by contractor |
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