The payment bond required on a public works contract over $25,000 must be issued by:
Explanation
Civil Code §9554(a) requires the payment bond to be executed by an admitted surety insurer, meaning a company the Insurance Commissioner has licensed to transact surety business in this state, so the agency can verify the guarantor's solvency. A bank may issue a letter of credit, but that is not a bond and does not satisfy §9554. An insurance agent sells the bond and does not stand behind it; personal liability of the agent is not security the statute recognises. And the awarding body is the party the bond protects, so it cannot also be the guarantor.
Law Reference: Civil Code §9554(a); Code Civ. Proc. §995.311This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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