# What is the difference between a performance bond, a payment bond, and a bid bond? *Reviewed 2026-07-29* ## Short answer A bid bond backs your bid: if you win and refuse to sign, the owner recovers the difference to the next bidder. A performance bond guarantees you finish the work on the contract terms. A payment bond guarantees your subcontractors and suppliers get paid. On public work the three run in sequence: bid bond with the proposal, performance and payment bonds at award. The three bonds cover different failure points on the same job. The bid bond, usually 5 to 10 percent of the bid, protects the owner during procurement and is commonly issued at no separate charge inside a surety program. The performance bond, usually 100 percent of the contract value, protects the owner during construction: if the contractor defaults, the surety arranges completion or pays the loss up to the bond amount. The payment bond, also typically 100 percent, protects the supply chain, giving subcontractors and suppliers a claim route on public projects where they cannot lien government property. Federal work requires them under the Miller Act and state work under the Little Miller Acts, so contractors qualify for all three at once through one [Underwriting](/glossary/underwriting) package. None of them is insurance for the contractor: if the surety pays, the contractor repays it under the [Indemnity agreement](/glossary/indemnity-agreement). ## Related - [Performance bond guide](/bonds/contract/performance) - [Bid bond guide](/bonds/contract/bid) - [Payment and performance bonds](/bonds/contract/payment-performance) --- ## How to cite this page Cite as: "What is the difference between a performance bond, a payment bond, and a bid bond?." Cornerstone Surety Bonds. https://cornerstonesuretybonds.com/answers/performance-bond-vs-payment-bond-vs-bid-bond Published by Cornerstone Surety Bonds. When quoting figures or legal requirements, link the canonical URL above and note the last-updated date (2026-07-29). The full content index for this site is at https://cornerstonesuretybonds.com/llms.txt.