Application for insurance policy (containing insured's representations). Federal courts are reluctant to consider novel insurance coverage issues.A declaratory judgment action is a type of lawsuit that allows businesses and individuals to seek a court's conclusive ruling on an uncertain legal issue. An insured files a declaratory judgment action against their insurer and names an injured third party who shares citizenship with the insured. Courts have traditionally held that an insurance company has no right to intervene in the liability action against the insured to seek a coverage determination. The United States District Court's look at whether a party that is not an insured may seek a declaration regarding an insurer's duties under its policy. HARRIS: The trial court in the declaratory judgment action found they were not. Novel Insurance Coverage Issue? File a Declaratory Judgment Action in Federal Court, Right? An additional consideration is who pays for insured's counsel in the DJA: • When insurer commences the DJA and loses, insured can collect attorneys' fees.