The first quarter of the year is critical for DFW contractors. January through March is when projects ramp up, crews expand, and planning for the year takes shape.
It is also when the most expensive insurance mistakes happen.
In the rush to get back to job sites after the holidays, key insurance steps are often missed. A skipped email or forgotten update in January can lead to a denied claim in July or a massive audit bill in December.
Here are the top five insurance mistakes we see DFW contractors make in Q1, and how to fix them before they cost you.
Mistake 1: Ignoring the Annual Audit
What Happens:
You receive a letter or email from your insurance carrier in January or February:
“It’s time for your annual premium audit.”
You’re busy. It gets pushed aside or ignored.
The Consequence:
If you do not respond, your carrier will complete an estimated audit using their maximum allowed assumptions, usually increasing sales or payroll by 25 to 50 percent.
This often results in a surprise bill of $10,000 to $20,000.
The Fix:
- Assign your bookkeeper or office manager to handle the audit immediately.
- If you need an extension, request it before the deadline.
- Pro Tip: Email us the audit first. We will review it for errors before it goes to your carrier.
Mistake 2: Not Updating Payroll for the New Year
What Happens:
You had a great 2025. Business grew. You hired three new employees. But your 2026 policy was renewed using 2024 payroll numbers.
The Consequence:
You are paying monthly premiums based on outdated payroll, which means your end-of-year audit will bring a lump sum adjustment.
Example:
You pay $500 per month now. You should be paying $1,000.
That’s a $6,000 audit bill due all at once.
The Fix:
- Call us in January with your 2026 payroll estimates.
- We can adjust your premium now to avoid cash flow shocks later.
Mistake 3: Forgetting to Add New Equipment
What Happens:
You purchase a new $60,000 skid steer or $15,000 trailer in January to take advantage of tax deductions.
The Consequence:
The equipment is stolen in February, but it was never added to your Inland Marine policy.
If it’s not listed on your equipment schedule, it’s not covered.
The Fix:
- Email us the bill of sale the same day you buy new equipment.
- We can add it to your policy in minutes.
Mistake 4: Not Collecting Subcontractor COIs
What Happens:
You bring on a new framing crew or electrician in Q1.
They promise to send their insurance certificate later and you let them get started.
The Consequence:
- Liability Risk: If they cause damage and are uninsured, you are liable.
- Audit Penalty: If you cannot produce a valid Certificate of Insurance (COI) during your audit, your carrier will charge you as if they were your employee, inflating your premium.
The Fix:
- Make it policy: No COI, no check.
- Do not issue payment until a current COI is on file.
Mistake 5: Assuming Renewal = Full Coverage
What Happens:
Your policy renews automatically. You pay the bill and assume everything stayed the same.
The Consequence:
Carriers update policy language every year. Without notice, you may now have:
- A Residential Exclusion
- A Subcontractor Warranty that voids claims if your subs aren’t insured
- Roof coverage reduced to Actual Cash Value instead of Replacement Cost
The Fix:
- Schedule a 15-minute renewal review with us.
- We will flag changes and exclusions that could impact your next claim.
Contractor FAQ
What if I miss my audit deadline?
Carriers will complete an estimated audit using inflated numbers. You will owe the difference immediately. Always submit or request an extension in advance.
Do I need to list every tool and trailer?
Yes. If it’s not on your Inland Marine schedule, it’s not covered. Send us a photo or receipt, we will update your policy quickly.
My subcontractor says they’re insured but hasn’t sent a COI. Is that okay?
No. You must have the COI in hand before work begins. If not, your carrier will treat them as uninsured, and charge you as if they are on payroll.
Can I just use the same payroll from last year?
Not if your team or revenue grew. Keeping outdated payroll leads to large audit adjustments later. Update your estimates each January.
Start 2026 Clean and Confident
The difference between a profitable year and a painful one often comes down to these early-season details. A missed COI or audit can erase months of profit.
At Neill Insurance Brokers, we do more than sell policies. We help DFW contractors:
- Prepare for audits
- Track and protect equipment
- Avoid subcontractor liability
- Optimize premiums around your real payroll and risk
Start strong this year. Let us help you review your policy and fix any gaps now, before they cost you later.
