The Massachusetts HIC Guaranty Fund: who qualifies, how much it pays and how to claim

The Massachusetts HIC Guaranty Fund is a safety net for homeowners who win a case against a registered contractor but never get paid. According to the state's Office of Consumer Affairs and Business Regulation (OCABR), it covers up to $25,000 of your actual loss. Here is who qualifies, how the money is calculated, and how to protect your eligibility before you ever sign.

I am a registered Home Improvement Contractor (HIC #220484), so I pay into this fund myself. I would rather my clients never need it, but every homeowner in Somerville and Cambridge should know it exists.

What the Massachusetts HIC Guaranty Fund is

The fund was created by M.G.L. c. 142A, section 5 and sits within OCABR. OCABR's Guaranty Fund claim page describes it this way:

• It is a fund of last resort for consumers with an unpaid final judgment against a contractor.
• It is paid for by a one-time fee contractors pay when they register.
• It pays your actual loss, up to $25,000, which may differ from the amount of your award or judgment.

Older state guides you may still find online mention a $10,000 cap. The current OCABR pages say $25,000. Either way, the fund is meant to cover a real out-of-pocket loss, not to replace a lawsuit or pay for upgrades you never contracted for.

Who qualifies

OCABR's eligibility page says you must be able to prove:

1. There was a contract for the job.
2. The contractor was registered with OCABR when the contract was signed.
3. The contractor, not the homeowner, pulled the building permit.
4. The work was on a pre-existing one- to four-family home in Massachusetts that is the owner's primary residence.
5. You won a court judgment or arbitration award, and all reasonable efforts to collect it have been exhausted.

Who is not covered

• Unregistered contractors. The fund only pays for losses caused by registered contractors and their subcontractors and employees working within the contract's scope.
• Owner-pulled permits. Section 2 says homeowners who pull their own permits are excluded.
• Homes you do not live in, such as an investment triple-decker where you are not an occupant.
• Side deals. Work done under a separate agreement outside the contract does not count.

Check a contractor's registration before you sign on the MA Contractor Hub. My guide on checking a contractor's license walks through it.

How "actual loss" is calculated

The fund does not simply pay your judgment. OCABR uses one of three formulas:

• No work done: the amount you paid the contractor.
• Some work done properly: the reasonable cost to complete and repair, minus the part of the contract price you have not paid.
• All work done, but done wrong: the cost to correct the faulty work.

OCABR adds that if a contractor grossly underbid the job, the loss is figured differently: what you paid, minus the value of good work and materials properly used, plus the cost to fix bad work.

How to file a claim, step by step

1. Gather your paperwork: the signed contract, payment records, photos and the permit showing the contractor pulled it.
2. Win your case. Sue in superior, district or small claims court under section 3, or use the state-approved arbitration program. Under section 4, arbitration cannot be filed more than 5 years from the contract date.
3. Try to collect. The fund pays only after reasonable collection efforts fail.
4. Apply on the MA Contractor Hub. OCABR's claim page says to apply within seven years of the contract date. Its eligibility page lists shorter windows, so call the hotline at (617) 973-8787 early to confirm your deadline.

After the fund pays you, OCABR says the contractor must repay the fund with interest within 30 days, or face fines, loss of registration and possible criminal prosecution.

The best claim is the one you never file

The fund helps, but a claim takes a judgment, collection efforts and paperwork. A clear written contract, payments tied to finished work and a registered contractor who pulls the permits prevent most problems. My hiring checklist covers all of it.

Need a hand?

I am a registered HIC and licensed Construction Supervisor, and I pull every permit on my jobs. Book a free walkthrough and I will send a written line-item budget, usually within 48 hours. I work in Somerville, Cambridge and across Greater Boston.

Want someone on your side? See what I do as an owner's representative and how I price work.

About the author

Mateus Magno founded Magno & Co in 2020. He is a licensed Massachusetts Construction Supervisor (CS-123658), registered Home Improvement Contractor (HIC #220484) and certified Lead-Safe Renovator Supervisor who has renovated and managed over $5 million in projects across Greater Boston.

More about Mateus →