Declaratory Judgment to Determine Coverage Rights In a Car Accident
In Dairyland County Mut. Ins. Co. v. Childress, 650 S.W.2d 770, 775 (Tex. 1983), the Texas Supreme Court held that the insured and the injured party are not in privity with regard to a declaratory judgment action brought by the insurer to determine coverage rights prior to the adjudication of the underlying claim by the injured party against the insured. Dairyland, 650 S.W.2d at 774.
The court concluded that the statutory requirement in Texas for all drivers to carry liability insurance implies that all potential claimants for damages resulting from automobile accidents are intended as beneficiaries. Dairyland, 650 S.W.2d at 774-76; Wright v. Rodney D. Young Ins. Agency, 905 S.W.2d 293, 295 (Tex. App.--Fort Worth 1995, no writ).
Accordingly, the injured party is a third-party beneficiary of the liability insurance contract and has rights which may not be precluded by the prior action solely between the insured and the insurer. Dairyland, 650 S.W.2d at 774-76.