Final answer:
A payment bond is the surety bond that ensures contractors pay for labor and materials. It is part of contract surety bonds and usually issued alongside a performance bond, as opposed to a fidelity bond or bid bond. The correct options are 1 2 3.
Step-by-step explanation:
The surety bond that guarantees that bills for labor and materials will be paid by the contractor as they are due is the payment bond. This type of bond is a part of the contract surety bonds that assure the expenses to suppliers, subcontractors, and laborers will be paid.
This bond is critical to provide financial protection against the possibility of a contractor failing to pay these parties. It is usually issued along with a performance bond, which ensures the completion of the project as per the terms of the contract.
In contrast, a fidelity bond protects against fraudulent acts, and a bid bond provides financial assurance that the bidder on a contract will enter into the contract and provide the required performance and payment bonds if awarded. The correct options are 1 2 3.