Breach of Contract Suit Will Resolved Issue of Coverage

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Some people seem to forget that an insurance policy is nothing more than a contract. When a person sues his or her insurer for refusing to pay a claim a breach of contract suit will resolve that coverage either applied or not. Plaintiff Kenneth Schurr sued alleging that Defendant AIG breached an insurance contract by failing to cover damages and sought a separate cause of action for declaratory relief that the policy provided coverage for the fraud that victimized Schurr. In Kenneth Schurr v AIG Property Casualty Company, Civil Action No. 21-20092-Civ-Scola, USDC (May 13, 2021).

ZALMA OPINION

Since a breach of contract claim will, necessarily, determine that the policy provided coverage for the fraudulent transfer or it did not, declaratory relief on coverage is surplusage. In either case, the breach of contract action will resolve the issue of coverage and there is no need for a separate cause of action for declaratory relief to establish the existence of coverage.