A performance and payment bond protects the Owner of the project against your non-performance of the contract, and protects certain subs/suppliers against non-payment. A bond is a form of credit to you, not insurance. When a surety extends credit to you with a bond, they are vouching that you will perform your contract and pay certain bills, with the understanding that you are corporately and personally guaranteeing that you will reimburse the surety company for any claims. The advantage of a bond for the contractor is that it will allow them to do work that is limited to only those contractors who can bond the project. Other advantages of having a bonding relationship include the expertise and knowledge that the bonding company and agent can provide you with the management and growth of your business.