Maryland Contractor License Bonds
Maryland Contractor License Bond Information
The surety bond is required by the Maryland Home Improvement Commission (MHIC) for home improvement contractors and the bond is issued for the benefit of the Maryland Home Improvement Guaranty Fund. The penal sum of the bond is $20,000 and it is needed to ensure compliance with the Annotated Code of Maryland, Business Regulation Article, Title 8, Home Improvement. The 2-year bond is required to obtain (and maintain) a Maryland contractors license for contractors engaged in home improvement and remodeling.
Local contractor bonds in Maryland are required for the following cities and counties; Baltimore, Calvert, Carroll, Hagerstown, Price George, and St. Mary's. See our Spotlight article for more on Contractor License Bonds. If this bond is for a job that you are bidding or a contract that has been awarded to you, the surety bond you need is a Contract/Construction Bond rather than a Contractor License Bond.
How Much Does a Contractor Bond Cost in Maryland?
Bonds up to $25,000
What does a Contractor Bond Protect Against?
The bond protects the state of Maryland and the Home Improvement Guaranty Fund in the event that the Fund is damaged as a result of the principal’s non-compliance with the Maryland Home Improvement Law. The MHIC home improvement contractor surety bond ensures that the principal complies with Annotated Code of Maryland, Business Regulation Article, Title 8.
The aggregate of liability of the surety company under this bond for all payments from the Maryland Home Improvement Guaranty Fund due to violations of the Maryland Home Improvement Law by the principal is limited to $20,000. Renewals covered by the bond will establish a new surety bonding term. The surety company’s maximum liability is $20,000 per bonding period. This surety bond is issued for a 2-year term. It may be canceled at any time by the surety company with 30 days advance written notice provided to the Maryland Home Improvement Commission.
Getting Your Maryland Business License or Registration
- Provide evidence of at least two years of experience in home improvement work, construction and/or related education
- Provide proof of financial solvency to the Commission which is judged based on the scope and size of business in relation to total assets, liabilities, and net worth along with a review of the credit report. Any applicant not meeting the Commission's financial solvency guidelines may furnish a surety bond or obtain an indemnitor.
- Articles of incorporation and a Certificate of Good Standing from the Department of Assessments and Taxation must be submitted by corporations.
- Ensure proposed trade names are available with the Commission and then register the name with the Department of Assessments and Taxation. A certificate of trade name registration must also be submitted with the license application.
- Show proof of liability insurance coverage of $50,000. The insurance must be in effect at all times. Contractors are required to provide the Commission notice of cancellation of liability insurance at least 10 days before the effective date of the cancellation.
- The license period is two years from the date of issuance of the original license.
Licenses can be renewed online from the Maryland Department of Labor, Licensing & Regulation Home Improvement Commission website.
Other Helpful Information and Links
The Maryland Home Improvement Commission (MHIC) licenses and regulates home improvement contractors and salespersons in the state. MHIC defines home improvement work as alteration, remodeling, repair or replacement of a building or part of a building used as a residence. The home improvement definition also includes work done on individual condominium units but not work done on commonly owned areas of condominiums or buildings that contain four or more single family units. The Commission is also tasked with investigating complaints by homeowners, awarding monetary damages against licensed contractors, and prosecuting violators of the Maryland home improvement law and related regulations.
The Commission has a Guaranty Fund which is funded by licensed contractors who pay an assessment when securing and renewing a Home Improvement license. This Fund compensates homeowners for financial losses due to failure to perform a home improvement contract or poor workmanship by licensed contractors. The maximum amount that a homeowner may recover through the Fund is the amount paid to the contractor, up to $20,000. If the total amount of all claims against a contractor exceeds the maximum then each homeowner’s share of the award is pro-rated based on contracted amounts.