A surety bond that guarantees the contractor will pay all subcontractors, laborers, and material suppliers on the project.
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In the Field
On federal jobs, the Miller Act requires both performance and payment bonds. The payment bond protects subs who can't file a mechanics lien on public property. Subs should get a copy of the bond when they sign their subcontract.
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Rule of Thumb
Payment bonds are typically 100% of contract value and issued alongside the performance bond from the same surety.