Shireman Construction Logo

812.738.8291

812.738.8291

What's the Difference Between a Performance Bond & Payment Bond?

Performance & Payment Bonds

June 29, 2017
James Shireman

Are you unsure what the difference is between a performance bond and payment bond? Let us give you some helpful tips and info to help you out on your next construction project.

What is a Performance Bond?

Briefly, this is a legal document supplied by the insurance company guaranteeing that a contractor will finish the construction project in accordance with the contract documents. The insurance company charges a premium to supply this guarantee Bond. It is important to note that this PERFORMANCE BOND does NOT guarantee the payment of all invoices, it merely guarantees the project will be completed if the contractor should default on their obligations.

What is a Payment Bond?

This is a legal document provided by an insurance company that guarantees that the invoices connected with the project will get paid. These Payment Bonds are normally supplied as a “sister” document to the Performance Bond to provide full circle coverage. Note that the PAYMENT BOND by itself does NOT guarantee the completion of the project. It merely guarantees that legitimate invoices directly connected to the project will be paid to protect the owner from liens.

or  View All

Let's discuss
your project.

812.738.8291
812.738.4533 Fax
Shireman Construction
3081 Progress Blvd. (Industrial Park)
Corydon, IN 47112

Let's discuss
your project.

812.738.8291
812.738.4533 Fax
Shireman Construction
3081 Progress Blvd. (Industrial Park)
Corydon, IN 47112