Insurance companies can drop anyone at anytime. The issue is whether you caused an accident. If your insurance company deems you at fault, then it can place adverse information on your driving record which is viewed by all insurance companies. Generally this adverse information occurs if your insurance company pays out more than $750 (last time I checked) on a claim.
I am not sure what type of declaratory action you have exactly, but best of luck,.
You still had a loss, the just did not cover it. It's a valid basis.
If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore, NY 11710 Telephone -516.512.6333 Email - Jgold@goldbenes.com