Insurance, Financial Solvency & Renewal Requirements
Beyond passing the exam, an MHIC contractor must carry the required insurance, prove financial responsibility, and keep the license current. This chapter reviews the general-liability insurance requirement, the financial-solvency and bond options, and the two-year renewal cycle.
General liability insurance (Bus. Reg. §8-302.1)
Effective June 1, 2024, Business Regulation §8-302.1 requires every MHIC home-improvement contractor to carry commercial general liability insurance of at least $500,000. This is a significant increase over the older figure and is now the current standard, so candidates should answer $500,000 for the minimum general-liability requirement. Proof of coverage must be filed with the Commission, and lapsed coverage puts the license at risk. General liability protects the homeowner and third parties against property damage and bodily injury arising from the contractor's work.
Financial solvency, surety bonds, and indemnitors
The MHIC evaluates each applicant's financial responsibility using total assets, liabilities, net worth, and a full credit report. An applicant who does not meet the solvency guidelines is not automatically denied — Maryland allows the applicant to purchase a surety bond or obtain a qualified indemnitor to backstop the license. These financial-responsibility tools, together with the Guaranty Fund, are how the state protects homeowners who depend on a contractor's ability to complete the work and stand behind it.
License term, renewal, and reference material
An MHIC license is issued for two years and must be renewed with current insurance and any required Guaranty Fund payment. Because the Contractor exam is based on the 5th edition of the Contractors Guide to Business, Law and Project Management and tests the operation of a home-improvement business, applicants should study that guide alongside the Maryland Home Improvement Law (Title 8). The exam is computer-based and multiple choice at a 70% passing standard, so steady preparation across licensing, contracts, consumer-protection rules, and business/financial fundamentals is the reliable path to passing on the first attempt.