A payment bond is a promise that the workers, subcontractors, and suppliers on a job will get paid. It usually comes paired with a performance bond on bigger projects.
- Who needs it
- Contractors on public and large private jobs
- Typical bond amount
- Equal to the contract value
- What you pay
- Usually included with the performance bond
- Term
- Length of the project
- A claim protects
- Subcontractors, workers, and suppliers
What is a Payment Bond?
A payment bond protects the people below the main contractor. If the contractor does not pay a sub or a supplier, those parties can file a claim against the bond and get paid.
This matters because workers on public land cannot put a lien on government property. The payment bond is their safety net instead.
Who needs a Payment Bond?
Contractors on public projects usually must provide one. On federal jobs over $150,000, the Miller Act requires it. Many states have their own version called Little Miller Acts.
Project owners and lenders also like payment bonds because they lower the chance of liens and unpaid bills.
How does a Payment Bond work?
The steps look like this:
- You win a public or large private contract.
- The owner requires a payment bond, often with a performance bond.
- Junno Surety writes the bonds based on your profile.
- You pay your subs and suppliers as the work goes on.
- If you do not pay them, they file a claim against the payment bond.
If the bond pays a sub, you repay the bond company. Pay your team on time and claims stay away.
How much does a Payment Bond cost?
A payment bond is usually sold together with a performance bond, and the price covers both. The combined cost is often 1% to 3% of the contract.
Junno Surety prices at the industry rate minus 5%. Your credit and finances set your exact number.
What happens if someone files a claim?
A claim comes from a sub or supplier who was not paid. The bond company checks the work was done and the bill is real. If valid, they pay the claim, and then you pay the bond company back.
How to get your Payment Bond from Junno Surety
Junno Surety bundles your payment and performance bonds so the job is fully covered. Share your contract and basic numbers, and we will quote you fast.
We are a licensed surety bond agency and can often issue your payment bond the same day. Start your free quote → or call (762) 499-0237.
Things to know about a Payment Bond
The payment bond exists because of a simple rule. You cannot put a lien on public property. So if a contractor does not pay a subcontractor on a government job, that sub cannot go after the building or road. The payment bond is their backup instead. For you as the contractor, the lesson is clear. Pay your subs and suppliers on time, and the payment bond never gets used. Keep good records of who you paid and when. If a dispute does come up, your paperwork shows the truth fast. A clean payment history also makes your next bond easier and cheaper to get.
Frequently asked questions
Is the payment bond separate from the performance bond?
They are two bonds, but they are usually sold and priced together as P and P bonds.
Who can file a claim on a payment bond?
Subcontractors, workers, and suppliers who were not paid for work or materials on the job.
Why is it required on public jobs?
Workers cannot lien public property, so the payment bond gives them a way to get paid if the contractor does not pay.
Can a supplier really claim on my bond?
Yes. Subcontractors, workers, and material suppliers who were not paid for the job can file a claim on the payment bond.
Is the payment bond priced separately?
Usually no. It is bundled with the performance bond, and the combined premium covers both bonds.