Insurance policies, like other contracts, are occasionally subject to competing interpretations that do not align. Many insurance coverage disputes arise when the parties cannot agree on how a coverage endorsement, exclusion, or other provision of a policy is meant to apply in the context of the applicable insurance policy or policies. A declaratory judgment action asks a trial court to declare the rights of the parties and clarify competing interpretations of policy language. Continue reading and reach out to the Maryland insurance lawyers at Brown & Bullock, LLC to learn more.

What is a Declaratory Judgment Action?

A declaratory judgment action is a type of statutory claim that asks a court to interpret and declare the legal rights of the parties to a written instrument, where the parties’ rights are impacted by statute, regulation, or the instrument itself. In the insurance context, this typically means asking a judge to determine whether an insurer has a coverage obligation or duty to defend based on policy language following a specific set of facts. Declaratory judgment actions are often used in insurance coverage disputes to resolve issues including:

Whether an insurer has a duty to defend a policyholder in an underlying lawsuit
Whether a policy provides coverage for a particular loss or occurrence
How exclusions, endorsements, or conditions apply to a claim
Whether coverage limits apply to one claim or multiple claims

Declaratory judgment actions are not useful only in insurance coverage disputes. Brown & Bullock pursues declaratory judgment actions on behalf of its clients across Maryland to resolve disputes, including, but not limited to:

Enforcement of non-compete and non-disclosure clauses in employment contracts
Satisfaction of conditions precedent to trigger payment obligations in commercial contracts
Enforcement of non-disclosure provisions in

When Are Declaratory Judgment Actions Used in Insurance Disputes?

Declaratory judgment actions often used when a coverage dispute arises, but liability or damages have not yet been fully resolved. Declaratory judgment actions are typically used to determine rights and obligations, rather than to assess and award compensatory damages. Declaratory judgment actions are typically used when:

An insurer fully or partially denies coverage
An insurer disclaims a duty to defend a claim filed against the insured by a third-party
An insurer denies coverage due to the existence of another policy that potentially covers the loss
An insurer issues a reservation of rights letter that creates uncertainty as to whether a future judgment will be covered

Who Can File a Declaratory Judgment Action?

Any party with a real and justiciable controversy may file a declaratory judgment action. This means that the dispute must be actual and concrete, not hypothetical or speculative. In insurance cases, declaratory judgment actions are commonly filed by:

Insurance companies seeking clarity on coverage obligations
Policyholders challenging an insurer’s coverage determination
Businesses or professionals named as insureds or additional insureds
Parties involved in underlying litigation affected by coverage issues

Courts will not issue advisory opinions. There must be a genuine disagreement involving legal rights or status under a written instrument. Correctly and effectively framing a declaratory judgment action is critical, and can have far reaching consequences for both insurers and policyholders alike.

Contact Our Maryland Insurance Lawyers

The attorneys at Brown & Bullock, LLC have substantial experience litigating declaratory judgment actions, from pre-suit through judgment and appeal. Contact us today with additional questions or to speak with an attorney.