Legal Question in Insurance Law in California

Re: cumus liability

In addition to the excellent reply already given, Cumis would apply anytime the conflict of interest between the insurer and the insured can be controlled by the attorney during the trial. An excellent example is if you punched someone in the nose. If you say it was self defense but the injured person says you hit them for no reason, it is likely that an insurer would reserve the right to deny coverage because of a potential "intentional act" exclusion. However, it would be pretty easy for an attorney to steer the trial one way or the other (intentional act instead of self defense) so the insurer must give you independent counsel.

In my practice, I deal with insurers around the nation and there are quite a few states which require independent counsel Most of them still refer to "Cumis" even though it is a California case.

Andrew Magwood

www.magwoodlaw.com

Re: cumus liability

The primary importance of Cumis counsel is that he or she only represents the insured, and not the insurer. The right to control the defense to protect the insured's interests is also a key right, due to the conflict w/the insurer.

Reimbursement is a totally separate issue, and may, but does not always, enter into the picture.

Re: cumus liability

The term "Cumis counsel" is used only in California, though a similar concept probably exists in most states. The name Cumis comes from the name of a court decision which defined the duties of insurers and attorneys in a specific situation.

A Cumis counsel is an attorney retained by a liability insurer to defend one of its insured subject to a reservation of the insurer's right to later deny coverage and demand reimbursement for the lawyer's services.

Sometimes when a person or entity is sued and demands that the insurer pay for her/its defense, the insurer will agree that the claim is covered and will send one of its lawyers to defend the insured. Sometimes the insurer will deny the claim and not provide a lawyer at all. Other times the insurer will be unable to say for certain whether the claim is covered; when this happens the insurer must provide a lawyer but can demand reimbursement if the case either ceases to be within the policy terms or turns out never to have been at all.

In such cases the interests of the insurer and the insured are in conflict because the insured wants the claim to be covered while the insurer wants it not to be. A lawyer representing the insured would have a duty to maximize the chance of the claim being covered, but an attorney who represents the insurer would have a duty to minimize this chance. This means that the insurer can'tt send one of its own lawyers because he would have conflicting duties.

Instead, the insurer hires an outside firm to represent the insured, and tells the insured that it may end up paying the bills later but that the insurer will pay them for now.

Situations like this are very common.