Free MHIC Training

10 practice questions

MHIC Licensing & Renewal

Getting the license is the start. These scenarios cover what it takes to keep it: insurance that never lapses, financial solvency at renewal, reporting changes to the Commission, and handling an audit or a credit review.

Start with question 10 of 10 answered
  1. 01What should a new MHIC contractor do before the first job?Set up before you take a call: (1) $50,000 general liability insurance; (2) a separate business bank account; (3) a contract template with every required element; (4) your MHIC number on your vehicles, 3 inches or taller; (5) your MHIC number on all advertising; (6) a filing system for contracts, permits, invoices, and photos.
  2. 02What happens if your contractor liability insurance lapses in Maryland?You must stop working until it is reinstated. Business Regulation §8-303 requires at least $50,000 in general liability coverage at all times, there is no grace period, and operating uninsured is grounds for license suspension.
  3. 03How do you meet the MHIC financial solvency requirement at renewal?Count business and personal assets together, including receivables, equipment, vehicle equity, and savings, toward the $20,000 required by Business Regulation §8-304. If you fall short, contact the MHIC before the deadline; never misstate it.
  4. 04What does the MHIC require to renew a contractor license?Every two years: (1) proof of at least $50,000 in general liability insurance; (2) proof of $20,000 in financial solvency; (3) a current credit report; (4) a Guaranty Fund contribution; (5) reporting any change to your business name, address, or structure.
  5. 05Do you need to update your MHIC license when you form an LLC?Yes. An LLC is a different legal entity, so under COMAR 09.08.01.04 it must be registered with SDAT and licensed by the MHIC with you as the qualifying individual. You cannot simply rename your existing license.
  1. 06Do you have to tell the MHIC when your business address changes?Yes. COMAR 09.08.01.11 requires you to notify the Commission of any change to your licensing information, including your business address, which must be a valid street address rather than a P.O. box.
  2. 07What if the MHIC lookup shows your old business name?Your MHIC records are out of date. If you moved from a sole proprietorship to an LLC, the LLC needs its own license, so apply for it, update your records under COMAR 09.08.01.11, and be upfront with the client.
  3. 08Why does the MHIC review your credit report?To judge your financial responsibility. COMAR 09.08.01.19 makes a credit report part of licensing and renewal, so answer the Commission's questions promptly and show how any problem was resolved; ignoring them is a separate violation.
  4. 09Can unpaid supplier bills put your MHIC license at risk?Yes. Under COMAR 09.08.01.22 the MHIC can treat unpaid debts from home improvement work as evidence of financial irresponsibility, which can affect your license. A payment plan shows good faith.
  5. 10How should a contractor respond to an MHIC compliance audit?Cooperate and respond by the deadline with organized records: signed contracts, insurance certificates, Guaranty Fund receipts, and business records. Under COMAR 09.08.01.27, failing to respond is itself grounds for discipline.