MHIC Financial Management and Consumer Protection 1

Question 1

Under Maryland Home Improvement Law, what is the maximum deposit a contractor may collect from a homeowner at the time of contract signing?

Accepted Answer

One-third of the total contract price

Answer

Maryland law limits the initial deposit to no more than one-third of the total contract price to protect consumers from financial overexposure before work begins.

Question 2

The Maryland Home Improvement Guaranty Fund is primarily designed to:

Accepted Answer

Compensate homeowners harmed by licensed contractors who fail to complete or properly perform work

Answer

The Guaranty Fund exists to reimburse homeowners who suffer financial losses due to defective, incomplete, or abandoned work by MHIC-licensed contractors.

Question 3

Maryland law requires a home improvement contract to be in writing when the contract price exceeds:

Accepted Answer

$500

Answer

Any home improvement contract exceeding $500 must be in writing under the Maryland Home Improvement Law to ensure consumer protection and enforceability.

Question 4

A homeowner who signs a home improvement contract at their residence during a door-to-door solicitation has the right to cancel within:

Accepted Answer

3 business days

Answer

Federal FTC rules and Maryland consumer protection law give homeowners 3 business days to cancel contracts entered into at their home through a solicited sale.

Question 5

What minimum general liability insurance must a Maryland MHIC-licensed contractor maintain per occurrence?

Accepted Answer

$50,000

Answer

MHIC regulations require licensed contractors to carry a minimum of $50,000 per occurrence in general liability insurance to protect homeowners from property damage and injury claims.

(MHIC) Maryland Home Improvement Contractor Practice Test

(MHIC) Maryland Home Improvement Contractor Practice Test

MHIC Financial Management and Consumer Protection 1