In Maryland, applicants for a home improvement contractor’s license must furnish proof of financial solvency, meaning that their total assets (net worth) exceed their financial liabilities and meet the state’s financial solvency guidelines. Applicants who can prove financial solvency will be covered by the MHIC Guaranty Fund, which compensates homeowners for damages up to $20,000 if their contractor’s work is substandard or incomplete.
Contractors who do not meet the financial solvency criteria must provide a two-year $20,000 surety bond or obtain an indemnitor to assume financial responsibility for the business.
Additionally, some municipalities may require contractors to obtain a local license, which may entail purchasing a contractor license bond.
