In a liability insurer’s declaratory relief action, the amount in controversy is not capped at the policy limits–if the insurer can show at least an “arguable basis,” for asserting that the amount in controversy requirement is satisfied by either the potential excess liability from the underlying claim or insurer’s anticipated future defense fees and costs in defending against the underlying action. Here, the insurer made such a showing. The claimant sought millions of dollars in damages from the insured and was angling to obtain an assignment of the insured’s rights against the insurer so as to sue the insurer for bad faith and excess liability. Also, the insurer showed that its defense costs in the claimant’s suit against the insured had already topped $100,000 and were likely to be as high in the future. Thus, the insurer satisfied the amount in controversy requirement and the district court had jurisdiction of the declaratory relief action.