After a car accident, the various insurance companies involved ideally will pay the claims in a timely manner, compensating the injured parties appropriately for their injuries and property damage. However, a dispute can sometimes arise among the parties involved and their insurance companies. The insurance company may claim that the accident is not covered under its policy or to the extent that the insured or victim believes it should be.
The policies involved can vary, from automobile insurance policies to personal catastrophic liability policies, sometimes known as umbrella policies. If coverage questions cannot be resolved through letters and discussions with the insurance company, then a declaratory judgment action is a useful tool for a court to determine whether or not an accident is covered under an insurance policy and, if covered, the extent of that coverage.
Because it is important after an automobile accident for an injured victim to receive all of the compensation to which they are entitled, all insurance coverage options should be explored. If coverage is denied, then it may be worth filing a declaratory judgment action to determine if the victim is entitled to compensation under the disputed policy.
An Insurer May Deny Coverage Based on Ambiguous Policy Language
As with all contracts, the words used in an insurance policy are given their plain meaning as written. Provisions of an insurance policy must be considered and construed together, and any internal conflicts between provisions must be harmonized if reasonably possible to effectuate the parties’ intent. However, if the policy language is ambiguous, that language must be construed in favor of coverage and against the insurer. A term is ambiguous when it is susceptible to two or more meanings. The burden is on the insurer to make exclusionary language clear enough to avoid any ambiguity.
Pursuant to these guidelines, it is possible that an insurance company will deny coverage for an accident under a provision that the insured believes is either ambiguous or contradicted by other provisions of the policy. Or, the plain language of the policy itself may provide for coverage, yet the insurance company will still interpret the provision to deny coverage. This is a situation where a declaratory judgment action might be useful – to determine the extent of the coverage so that all parties involved will understand the amount of insurance coverage available.
What Is a Declaratory Judgment Action?
A declaratory judgment action asks the court to determine the legal rights between the parties. The statutes governing declaratory judgment actions are found in Virginia Code §§ 8.01-184, et. seq. Section 8.01-184 provides in part that “[i]n cases of actual controversy, circuit courts have the power to make binding adjudications of right . . . . Controversies involving . . . instruments of writing . . . may be so determined, and this enumeration does not exclude other instances of actual antagonistic assertion and denial of right.”
The key to bringing a declaratory judgment action is that there must be an actual controversy. In other words, the controversy must be one that is justiciable, that is, where specific adverse claims, based upon present rather than future or speculative facts, are ripe for judicial adjustment. A hypothetical or abstract interest is insufficient to confer standing to bring a declaratory judgment action because a court may not render advisory opinions.
The Virginia Supreme Court found a justiciable controversy ripe for adjudication where a plaintiff brought an action for damages resulting from personal injuries and a defendant’s insurer sought a declaratory judgment as to its obligation to pay if the defendant was subsequently found liable for the plaintiff’s injuries. Thus, declaratory judgments are often used by insurance companies to determine if they have to provide coverage for an accident.
Sometimes, however, the victim of an automobile accident may want to bring a declaratory judgment action. For example, an insured may bring a declaratory judgment action against an insurer if insurance coverage has been denied by an insurance company.
Fishwick & Associates: Fighting for Individuals Injured in Automobile Accidents
If you have been injured in an automobile accident in Virginia, Fishwick & Associates can help you understand your legal options and your rights to compensation under various insurance policies. To schedule your free and confidential consultation, complete our online contact form or call us at 540.345.5890.
Virginia Farm Bureau Mutual Ins. Co. v. Williams, 278 Va. 75, 80, 677 S.E.2d 299 (2009).
Hill v. State Farm Mutual Auto. Ins. Co., 237 Va. 148, 375 S.E.2d 727 (1989).
St. Paul Fire & Marine Ins. Co. v. S.L. Nusbaum & Co., Inc., 227 Va. 407, 316 S.E.2d 734 (1984).
Va. Code §§ 8.01-184, et. seq.
Reisen v. Aetna Life & Cas. Co., 225 Va. 327, 302 S.E.2d 529 (1983).
Mosher Steel-Virginia v. Teig, 229 Va. 95, 327 S.E.2d 87 (1985).
Bryant v. Selective Ins. Co., 82 Va. Cir. 188 (Charlottesville 2011).
Miller v. Highland Cty., 274 Va. 355, 370, 650 S.E.2d 532, 539 (2007).
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.