Payment Bond
Definition. A Payment Bond guarantees that a contractor will pay subcontractors, suppliers, and laborers on a project. Often paired with a Performance Bond.
Also known as: Labor and Materials Bond
Required on public-works projects under the federal Miller Act and most state Little Miller Acts. Protects sub-contractors from non-payment by the prime contractor.
Sources cited
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Reviewed by California-licensed Property & Casualty insurance agent
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