If you are a contractor and need to get a Payment and Performance Bond it is extremely important you speak with your insurance agent! With a lot of projects that are done for the state or federal governments—you will find that these types of surety bonds are required to be able to undertake the project!
A Payment Bond is a type of contract surety bond which guarantees that a contractor or subcontractor will pay their subcontractors, suppliers, as well as laborers for their work and all materials provided! A Performance Bond is another type of contract surety bond which guarantees that a principal will fulfill their contractual obligations within a project! Reason why is the government wants it done right, and wants contractors to pay their laborers properly!
My cousin is a contractor and told me about a project he did for a school district—he 
needed to have both Payment and Performance Bond insurance just to build a single (But pretty expensive) retaining wall for a new school! He was telling me if the project is over a certain amount of money that you have to have these types of coverages, he mentioned that the “Miller Act” is the reason for this and places the threshold at $100,000 for federal projects. I also found out that in Texas the “Little Miller Act” applies to any state project—no matter the cost!
Better business Bureau ®