Maryland Contractor License Bonds Explained
Some types of contractors in Maryland have to undergo a licensing process before they obtain the right to work legally in the state. In the case of home improvement contractors, this may entail providing a contractor license bond.
The goal of the bonding requirement is to ensure that contractors will adhere to all applicable state laws. This is how customers are protected from any potentially unlawful activities of bonded contractors.
Your surety bond functions as a contract between your construction company as the principal that has to obtain the bonding, the Maryland Department of Labor, Licensing and Regulation as the obligee, and the surety as the bond provider.
Questions about Contractor License Bonds in Maryland
Who has to post this bond?
Home improvement contractors in Maryland may be required to provide a $20,000 surety bond in case they do not meet the financial solvency guidelines of the Department's Home Improvement Commission. The bonding requirement is set on a case-by-case basis by the licensing authority.
What are the Maryland contractor license bond costs?
The surety bond amount that you may have to obtain as a Maryland home improvement contractor is $20,000. In order to get bonded, however, you will need to post only a small fraction of the required amount. This is called the bond premium.
The surety bond cost that you have to pay is set by the surety that you apply with. It is based on the strength of your finances, such as your personal credit score, business finances, and liquidity and assets that you may have. By examining these factors, the bond provider assesses the level of risk involved in the bonding. The lower it is, the smaller the bond price would be.
|Maryland Contractor License Bond Cost Based on Credit Score|
|Surety bond name||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Maryland home improvement contractor bond||$20,000||$150-$300||$200-$500||$500-$1,000||$1,000-$2,000|
Is bonding possible if I have bad credit?
It is usually more difficult to get bonded if your finances are not in good shape. With our Bad Credit Surety Bonds program, applicants with issues such as low credit scores, tax liens, bankruptcies, and civil judgements can obtain the needed bonding.
You can expect bonding rates in the range of 5%-10% due to the increased risk. Due to our excellent partnerships with top A-rated, T-listed surety companies, you will still get a great bonding rate with us.
What is the bonding process like?
You can follow these steps to obtain your Maryland contractor license bond:
You will receive our free, no-obligation quote
You can then purchase the bond online
We will deliver to you a digital and a hard copy of your bond
Interested in learning more about the bonding process? You can delve into the details on our How to Get Bonded page.
In case you need assistance or have queries, we are here to help. Lance Surety Bonds' experts can be reached at (877) 514-5146.
What happens in case of a claim against my license bond?
The Maryland contractor license bond that you obtain as a part of your licensing serves as a safety mechanism for your customers. They can file a claim against your bond if you transgress from your legal obligations as a home improvement contractor in the state.
Claimants can seek a reimbursement up to the bond amount that you have provided for your license. At first, your surety may cover the costs. However, you need to compensate it fully, as the liability for proven claims is yours. As a result, it's best to avoid cases that can lead to claims, since they can harm your business significantly.
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What Our Clients Have To Say?
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