What Does Cumis Counsel Do?

Cumis counsel is a lawyer who represents the insured when there is a conflict of interest between the insured’s interests and those of the insurance provider. The name “Cumis counsel” comes from the 1984 California court case San Diego Navy Federal Credit Union v. Cumis Insurance Society, Inc. that established the right of the insured to be represented by independent counsel.

Whenever an insurance provider underwrites a policy, part of the agreement includes defending the insured when a claim is filed against their policy. Because the insurance company handles the legal defense, in most cases the provider will be responsible for selecting an attorney to represent both the insured and the insurer’s interests. Since the insured and the insurance provider usually have the same interests, such as limiting the amount of liability, having the same lawyer represent the insurance company and the insured individual usually does not pose a problem.

However, in some cases, the interests of the insured and the insurer are not aligned. This is called a “conflict of interest.” For example, in cases where the insurance company is denying full or partial coverage, an attorney that represents the insurance company may not vigorously defend the insured, as there is less at stake for the insurer. In these situations, California law entitles the insured to retain Cumis counsel. Here’s a quick guide.

Who Pays for Cumis Counsel?

The insurance company must pay for Cumis counsel. 

Under the Cumis counsel doctrine, the insured has the right to demand that their insurer pay attorney fees for independent legal representation instead of using an insurance company attorney if a conflict of interest exists. The insured has the right to select the attorney they want to represent them, and the insurance provider will foot the bill. 

What Is a Reservation of Rights Letter?

A reservation of rights letter is issued by an insurance provider to its insured to inform them that their claim might not be covered under their policy. This does not necessarily mean that the claim will be denied. Rather, the letter indicates that the insurance company is in the process of investigating the claim and reserves the right to deny the claim once the evaluation is complete. 

The issuance of a Reservation of Rights letter is a common trigger for the right to Cumis counsel. Because the insurance company might ultimately deny full or partial coverage of the claim, independent counsel is necessary to guarantee that the insured’s interests are protected.

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