Payment Bond

The payment bond states that coverage is for only those persons who furnish labor and/or materials directly to the prime contractor, or furnish labor and/or materials directly to a subcontractor of the prime contractor.

Labor and materials in the traditional sense are always covered and it is not necessary that the materials supplied be actually incorporated into the project if the materials were furnished by the claimant in the good faith and belief that they were intended for use in the project. The fair rental of lease equipment and the cost and repairs to equipment to keep it in production on a project are also recoverable, as is interest on such costs.

A subcontractor of the prime contractor who has supplied the bond and who has a direct contractual relationship with the prime contractor need not provide any notice to such prime contractor.

A person who has no direct contractual relationship with the prime contractor who has provided the bond, but has a direct contractual relationship with a subcontractor must give written notice to the prime contractor within one hundred twenty days (120) from the date on which he last performed labor or furnished materials on or to the job.