Insurance & LiensQuestion 1547 of 1605
Why might an owner prefer that the general contractor obtain a payment bond rather than rely solely on the contractor to pay subs?
a.If subs are unpaid and record liens, the payment bond surety can satisfy them, helping protect the owner's property from liens
b.It guarantees a completion date
c.It lowers the contract price
d.It eliminates the need for insurance
Explanation
A payment bond means unpaid subs and suppliers can look to the surety, reducing the chance they will lien the owner's property. It provides the owner financial protection against double-payment exposure from lower-tier lien claims.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- California Civil Code §2782 generally makes VOID a construction contract provision that requires one party to indemnify another for the latter's:
- A 'primary and noncontributory' insurance requirement in a subcontract means that when the sub names the GC as additional insured, the sub's policy should:
- On a private project with no notice of completion or cessation recorded and the work simply finished, ALL claimants (direct contractor, subs, and suppliers alike) have how long to record a lien?
- 'Inland marine' insurance for a contractor most commonly covers:
- An equipment rental company rents a crane to a subcontractor on a private project. To preserve a mechanics lien for unpaid rental charges, the rental company should:
- The primary function of a 'certificate of insurance' in the contracting process is to allow one party to:
Last reviewed: · editorial process
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)