The Demise of the Declaratory Judgment Action as a Device for Testing the Insurer's Duty to Defend

When a liability insurer defends claims brought against its insured, its interests frequently come in conflict with those of the insured. Over the years, courts and litigants have attempted to alleviate or eliminate this problem by several methods: providing the insured with independent counsel to represent his interests; a declaratory judgment action to test the insurer's duty to defend; direct actions by the injured claimant against the insurance company; and through the imposition on the insurer of an absolute duty to defend with a reserved right to test coverage at a later date. The second of these four methods the declaratory judgment action has been the most frequently used and the most effective from the insurer's point of view. Heretofore, Ohio has recognized the first two methods, and has rejected the third and fourth.

But a recent decision of the Ohio Supreme Court has reversed this traditional stand, and has adopted the fourth method as the exclusive device for eliminating the conflict of interest in the defense of claims by liability insurers.