In every coverage analysis, I start with a basic but powerful premise that you must thoroughly read the insurance policy before you can understand the claim. It sounds simple, but it’s where most coverage mistakes begin.
The first thing I look at is who the insured is and determine whether the named insured people or entities actually own or have an insurable interest in the property for which the claim is being made. If that’s wrong, everything else collapses, and I may have to think about a reformation action or agent negligence action.
Once I confirm who the insured is, the next step is to determine what property the policy covers, where it’s located, and how much coverage applies. This second step of matching the covered property to the damaged property was at the center of a recent case that shows how crucial it is to read the policy language and declarations information before jumping to conclusions about coverage.
In Trevino v. Next Insurance US Company, 1 the policyholder argued that his apartment and its interior improvements were damaged by storms and that the damage was covered under his commercial property policy. Next Insurance, however, moved for summary judgment, pointing to a glaring detail on the declarations page: the “Building Limit of Insurance” was listed as $0. The only coverage provided was for business personal property, capped at $32,670.
The federal judge agreed with the insurer. The court ruled that the policy was unambiguous. It insured business personal property only, not the building structure or its fixtures. Because all of the claimed losses were to the building itself, the court found there was no covered property damage, and therefore no coverage at all. The court’s opinion was straightforward that the plaintiff’s property may have been damaged, but not the kind of property the policy insured.
The Trevino decision is a textbook illustration of why a step of any coverage analysis, determining what property is covered, is essential. Even where damage is undisputed, the insurer has no obligation to pay for losses to property it never agreed to insure. I’ve seen many clients assume that “commercial property insurance” automatically includes coverage for the building, only to discover later that their policy covers property at a different address, with significant limitations or no coverage for the type of property damaged.
The declarations page tells a story and always needs to be carefully analyzed. It usually lists each category of property, the corresponding limits, and the insured address. In Trevino, a single line reading “Building Limit: $0.00” dictated the entire outcome.
Before debating how the damage occurred or whether exclusions apply, a careful coverage analysis demands that we first confirm the fundamentals about who is insured, what property the policy covers, and whether that property actually sustained damage. In my practice, that means starting with the insured’s name, ownership interest, and address, then reading through the policy’s coverage section and declarations page, line by line.
Every Word Matters in a Property Insurance Policy. As I stated in Property Insurance Contract Interpretation Basics for Policyholders, Public Insurance Adjusters, Company or Independent Adjusters, and Insurance Agents, we all should read the full policy.
Thought For The Day
“A small leak will sink a great ship.”
—Benjamin Franklin
1 Trevino v. Next Ins. US Co., No. 4:25-CV-01356 (S.D. Tex. Nov. 13, 2025) (See also, Next Insurance Motion for Summary Judgment and Trevino Response in Opposition to Motion for Summary Judgment).