Overview of Maryland Contractor License Bond Requirements

To obtain a Maryland home improvement contractor license, applicants are required to post a two-year $20,000 contractor license bond.

Why do I require a bond?

The state Home Improvement Law requires applicants for a MHIC license to obtain this bond. The bond agreement requires contractors to comply with the law and all its provisions when conducting work.

If a contractor violates the Home Improvement Law, a claim can be filed against their bond by anyone who suffers losses or damages as a result. The bond agreement then serves as a form of protection providing compensation to claimants. Compensation for claims can be as high as the full amount of the bond.

New to bonds? Our detailed ‘What is a surety bond' guide is a great resource for first-time applicants!

Start your surety bond application today! Why us?
  • Quick turnaround - just 1-2 business days
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  • Exclusive bad credit programs

See the sections that follow for more about the cost of this bond, how bond claims occur, and how you can apply for your bond.

If you have any questions about the bonding requirements for contractors in Maryland, call us at (866)-450-3412 anytime!

What's the Cost of the Maryland Contractor License Bond?

The cost of your bond is equal to a percentage of your $20,000 bond. The amount of your bond is the maximum amount of compensation that the bond agreement guarantees as security for claims. The cost, or premium, is determined by the surety depending on several financial factors.

How sureties determine the bond premium

Sureties set a bond premium on the basis of an applicant's finances. The most important factor is an applicant's personal credit score. Applicants with a high credit score are usually offered some of the lowest possible rates - so-called standard market rates.

To get a better picture, sureties may sometimes also consider some of the following factors:

  • Personal and business financial statements
  • Owned assets and available liquidity
  • Industry experience

Applicants that get bonded at standard market rates can expect a premium between 1% and 4% of the total amount.

Maryland Contractor License Bond Cost Based on Credit Score
Bond type Bond amount Credit Score
Above 700 650-699 600-649 Below 599
Contractor license bond $20,000 $150-$300 $200-$500 $500-$1,000 $1,000-$1,500

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Can applicants with low credit get bonded?

Yes, applicants with low credit can also get bonded. Due to their lower score, sureties will usually bond them at higher rates due to the higher risk they assume when issuing bonds under these conditions.

While rates for bad credit applicants are higher, they can be improved. By increasing your credit score, you can get a lower rate every time you apply to renew your bond. If you want to learn more about why rates for such applicants are higher and how to improve them, see our Bad Credit Program page!

How Do Contractor License Bond Claims Occur?

A claim can be made against a bond if the conditions of the bond agreement have been violated by the contractor. The bond agreement for Maryland contractors obliges them to comply with the state Home Improvement Law.

If a bonded contractor violates the law by, for example, not complying with the conditions of a home improvement contract they have entered into, a claim can be filed against their bond. When a claim is filed against the bond, the surety that backs the bond will investigate the claim to determine its veracity.

If the surety determines that the contractor has indeed violated the law, they may extend compensation to claimants which may be as high as the full amount of their bond. Yet, even if a surety covers a claim, it is the bonded contractor who is ultimately liable for any claims filed against their bond.

Conversely, if the contractor complies with their bond agreement and does not give rise to a claim, the only cost they must assume is the surety bond premium.

Apply For Your License Bond Today!

To get started with the bonding process, complete our short bond form below. We will then provide you with a free and exact quote on your bond, along with more information about the bonding process.

Start your surety bond application today! Why us?
  • The lowest possible rates
  • A 100% money-back guarantee
  • Access to specialty programs, not available to small agencies

Want to know more about getting bonded? Call us at (866)-450-3412!

Further Reading


About the author:
Todd Bryant
Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post, Entrepreneur.com, Azcentral.com and many more.