When an insurance policyholder has been sued and has presented the claim to its insurer for a defense, the plaintiff or insurance company may file a Declaratory Judgments to resolve issues involving insurance coverage.  Such issues may relate to the existence of coverage for a particular claim, whether a policy exclusion is applicable, or the priority of coverage between two or more insurers.  Am. Family Mut. Ins. Co. v. Moore, 912 S.W.2d 531 (Mo. Ct. App. 1995).  However, a declaratory judgment action should not be filed to reform the policy or when the insurer has already denied coverage under an insurance policy.

Prior to the commencement of a declaratory judgment action there must be a determination as to whether a “justiciable controversy” exists.  To establish a justiciable controversy, the petitioner must show that there is a controversy between adverse parties with “legal interests susceptible to immediate resolution and capable of present judicial enforcement.” Prof’l Firefighters Ass’n of Omaha v. City of Omaha, 803 N.W.2d 17, 26 (Neb. 2011).

When the policyholder has been sued and has presented the claim to its insurer for a defense, the presence of a justiciable controversy is usually apparent.  However, as noted above, a declaratory judgment may not be filed when coverage has been denied.  The denial of coverage by the insurer indicates that it was not uncertain or insecure of its rights, status, or legal relations with respect to the making of that decision.