The Third Circuit chipped away at an argument that policyholders have often wielded to keep coverage disputes out of federal courts, by ruling recently that district judges cannot refuse to hear insurance cases merely because the coverage issues may eventually arise in a tort action against the insured.
“Insurance coverage litigants still need to give appropriate consideration to the status of the issues in the underlying litigation and how those issues might be affected by a coverage action,” said Sherilyn Pastor, leader of McCarter & English LLP’s insurance coverage group. “Although insurers seem to prefer federal courts, whether policyholder or the insurer, you will not always favor one court over another. It really will depend heavily on the facts of a given case and the circumstances of each available fora.”