Insurance & LiensQuestion 1511 of 1605
The main reason an owner requires the general contractor to furnish BOTH a performance bond and a payment bond is to:
a.Replace the need for a written contract
b.Ensure the project gets completed AND that subcontractors and suppliers get paid
c.Reduce the contractor's insurance premiums
d.Satisfy the workers' compensation requirement
Explanation
A performance bond protects the owner against contractor non-completion, while a payment bond protects subs and suppliers (and indirectly the owner from liens) by guaranteeing they are paid. Together they cover the two primary financial risks on a project.
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)