Payment bond
Guarantees your subcontractors and suppliers get paid — usually paired with a performance bond on public projects.
What it is
A payment bond guarantees that you will pay your subcontractors, laborers, and material suppliers on a project. If they are not paid, they can claim against the bond, and the surety pays covered amounts up to the bond limit — which you reimburse. On public works it is typically required alongside a performance bond.
Who requires it
- •Public project owners — Public works contracts over a threshold generally require a payment bond to protect subs and suppliers (who cannot lien public property).
- •General contractors — GCs may require payment bonds from subs to reduce the risk of unpaid lower-tier claims.
What drives the price
- •Contract / bond amount — Premium is a percentage of the bonded amount.
- •Your financials and credit — Like performance bonds, payment bonds are underwritten on financial strength and history.
How surety bonds work
A surety bond is a three-party agreement between you (the principal), the government agency or party requiring it (the obligee), and the surety company that backs it. It is not insurance for you — it protects the obligee and the public. If a valid claim is paid on your bond, you are responsible for reimbursing the surety. Premium is a small percentage of the bond amount and is driven mostly by the required bond amount and the applicant’s credit.
Ready to get bonded? Quote and buy your payment bond online.
Quote & buy at SuretyBondly →Frequently asked questions
Do I need both a payment and performance bond?
On most public works projects, yes — they are usually required together. Private jobs vary by contract.
Who can claim against a payment bond?
Generally subcontractors, laborers, and suppliers who were not paid for covered work or materials on the bonded project.
Is it insurance?
No. If a claim is paid, you reimburse the surety. It protects those who work under you, not you.
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