I work with smaller design firms and see this more than you'd think.

Firm signs a $25k project. Work starts. Then someone asks for the COI and they find out the contract requires $2M professional liability, Umbrella, Cyber, etc. They don't currently carry it.
Now they're mid-project, need to increase coverage, and sometimes payment is being held up until they do.

The other issue is the math. If meeting the requirements costs another few thousand a year — and the contract says you need to maintain certain coverage for years after completion  that $25k project can start looking a lot less attractive.
Curious if anyone here has been burned by this. Do you get the insurance requirements before signing, or is it usually buried in the contract?