Licensing, Insurance, and Business Practices
Getting and keeping a license
- Contractor license: exam, at least two years of documented experience, fees, and compliance with workers' compensation and unemployment insurance requirements.
- Subcontractors and salespersons are licensed separately; salespersons work under a licensed contractor.
- Licenses run on a fixed term of two years and must be renewed; the license number must appear on contracts, bids, advertisements, and vehicles.
Insurance and business practice
Maryland employers with employees must carry workers' compensation; sole proprietors and certain officers may be exempt. General liability insurance is not a substitute for licensing, but owners and general contractors ask for certificates, and a lapse can cost you a job or a license. Keep contract files, written change orders, permit records, payment receipts, and proof of coverage.
Worked example
A contractor hires a helper, pays cash, carries no workers' compensation, and advertises "licensed and insured" without a license number. That exposes three problems: advertising without the required license number, failing to carry workers' compensation for an employee, and unlicensed home improvement activity by the helper. On a complaint MHIC can fine and suspend, and a job-site injury leaves the contractor personally exposed.
Traps
- Advertising "licensed" without listing the license number.
- Using an unlicensed subcontractor and assuming the paperwork is the sub's problem.
- Verbal change orders that later destroy the payment record.
- Letting insurance or workers' compensation lapse mid-term.
- Renewing late and continuing to contract on an expired license.