The Payment Bond also is known as labor & material bond protects certain laborers, material suppliers, and subcontractors against non-payment. This bond is significant for contractors who do public work. Since mechanic lien cannot be placed against public property, the payment bond will be the only protection these claimants have if they are not paid for the goods and services they provide. The payment bond enforces an obligation upon the contractor to pay the dues owed to the labor and for the materials that are used in the construction of a project. In case the dues are not paid, the owner can be confronted by subcontractors, and ends up paying the dues a number of times.
A payment bond, a type of contract bond, guarantees that a contractor will pay suppliers, laborers, and subcontractors (subject to contract terms) for labor and materials. Generally, payment and performance bonds are issued together as one bond, termed a “Performance and Payment Bond”.
We underwrite this bond based on credit, experience and references and approval of this bid bond program is usually within 24 to 48 hours depending on the amount of the bond.
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