Practice Test Geeks(MHIC) Maryland Home Improvement Contractor Practice Test
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Managing Risk Flashcards

7 cards from real MHIC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Under Maryland law, what is the maximum deposit a home improvement contractor may accept before starting work?

    Answer: One-third of the contract price

    Maryland limits the initial deposit on a home improvement contract to one-third of the contract price.

  2. What is the primary purpose of the Maryland Home Improvement Guaranty Fund?

    Answer: To compensate homeowners for actual losses caused by licensed contractors' poor or incomplete work

    The Guaranty Fund reimburses homeowners for actual losses from unworkmanlike, inadequate, or incomplete work by licensed contractors.

  3. If the Guaranty Fund pays a claim against a contractor, what happens to the contractor's license?

    Answer: It is suspended until the contractor repays the fund with interest

    A contractor's license is suspended until the Guaranty Fund is reimbursed for any amount paid on its behalf.

  4. What minimum amount of general liability insurance must an MHIC-licensed contractor maintain?

    Answer: $50,000

    Maryland requires licensed home improvement contractors to carry at least $50,000 in general liability insurance.

  5. Which contract provision best protects a contractor against disputes over added work requested mid-project?

    Answer: A written change order signed by both parties before the work is done

    Signed written change orders document scope, price, and approval before extra work begins.

  6. A homeowner signs a home improvement contract at their kitchen table after a door-to-door solicitation. What risk must the contractor plan for?

    Answer: The homeowner may cancel within the statutory right-of-rescission period

    Contracts signed at a buyer's home after solicitation carry a statutory cancellation right, so work should not start until it expires.

  7. Why should a contractor avoid starting work before a home improvement contract is signed?

    Answer: Without a signed contract, scope and payment terms may be unenforceable and the work may violate MHIC rules

    Maryland requires a written contract with specific terms, and working without one exposes the contractor to payment disputes and violations.

How this page was made: written with AI tools and published by Nathan Beja, founder of Practice Test Geeks, who is responsible for its content. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy

Sources & references

Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy

  1. dsd.maryland.gov — Fees · verified Oct 2026
  2. labor.maryland.gov — Renewal, test delivery, eligibility, fees, exam format, passing score, registration, retake policy, score validity · verified Oct 2026