What to Do If You Have Been Sued and Received a Reservation of Rights Letter?
Most people know that if they are in an automobile accident and get sued by another driver, their insurance will hire an attorney to defend them. Things get trickier when a person is sued in other situations. Obviously, if you are sued by a neighbor when his property is damaged due to a water leak on your property, your auto insurance will be no help. However, virtually all property owners have homeowners insurance, which is required by banks as part of property purchase financing. In the case of damage caused by a water leak, if you promptly contact your homeowners insurance company, it will probably pay to have an attorney defend you at no charge.
But sometimes, something happens and although the insurance company agrees to hire you an attorney, it also says that it is doing so under a reservation of rights. For example, if the insurance company thinks that you did something intentional or illegal to cause the lawsuit, it will issue a reservation of rights letter. This means that the legal department of the insurance company has doubts about whether what happened is really covered under the policy and the insurance company may decide anytime that it has no duty to protect you. It may even sue you to recover the money it has already paid to defend the case.
Under California law, if you have been sued and have been sent a reservation of rights letter, you may be entitled to retain an independent lawyer, not affiliated with the insurance company, but which the insurance company must nonetheless pay. This type of lawyer is called Cumis Counsel because of a landmark legal decision in San Diego Navy Federal Credit Union v. Cumis Insurance Society, Inc., 162 Cal. App. 3rd 358 (1984). The rule in this case has been adopted by the California legislature in California Civil Code section 2860.
Cumis Counsel means a lawyer is required because there is a conflict of interest between the defendant and his insurance company. The reason that having a Cumis Counsel is very important is that in virtually all cases, the attorneys who are hired by insurance companies make a living by keeping the insurance companies happy over a period of many years. Because these lawyers "know on which side their bread is buttered," they may be inclined to be more concerned with protecting the insurance company from the obligation to protect you than actually representing your interests in the case. Independent attorneys retained as Cumis Counsel have no prior relationship with the insurance company and are only bound to protect the defendant.
For better or worse, the question of whether or not a lawsuit is covered by insurance often depends upon obscure legal rules and for that reason, when there has been a reservation of rights letter issued, it is very important for the insured to have independent legal representation to enforce the insurance policy in favor of the insured.
The firm has acted as Cumis Counsel and does not charge the client for fees in this role. If you have been sued and have questions about whether you can retain Cumis Counsel, please feel free to give us a call at 1-800-306-6010 or contact us online.
But sometimes, something happens and although the insurance company agrees to hire you an attorney, it also says that it is doing so under a reservation of rights. For example, if the insurance company thinks that you did something intentional or illegal to cause the lawsuit, it will issue a reservation of rights letter. This means that the legal department of the insurance company has doubts about whether what happened is really covered under the policy and the insurance company may decide anytime that it has no duty to protect you. It may even sue you to recover the money it has already paid to defend the case.
Under California law, if you have been sued and have been sent a reservation of rights letter, you may be entitled to retain an independent lawyer, not affiliated with the insurance company, but which the insurance company must nonetheless pay. This type of lawyer is called Cumis Counsel because of a landmark legal decision in San Diego Navy Federal Credit Union v. Cumis Insurance Society, Inc., 162 Cal. App. 3rd 358 (1984). The rule in this case has been adopted by the California legislature in California Civil Code section 2860.
Cumis Counsel means a lawyer is required because there is a conflict of interest between the defendant and his insurance company. The reason that having a Cumis Counsel is very important is that in virtually all cases, the attorneys who are hired by insurance companies make a living by keeping the insurance companies happy over a period of many years. Because these lawyers "know on which side their bread is buttered," they may be inclined to be more concerned with protecting the insurance company from the obligation to protect you than actually representing your interests in the case. Independent attorneys retained as Cumis Counsel have no prior relationship with the insurance company and are only bound to protect the defendant.
For better or worse, the question of whether or not a lawsuit is covered by insurance often depends upon obscure legal rules and for that reason, when there has been a reservation of rights letter issued, it is very important for the insured to have independent legal representation to enforce the insurance policy in favor of the insured.
The firm has acted as Cumis Counsel and does not charge the client for fees in this role. If you have been sued and have questions about whether you can retain Cumis Counsel, please feel free to give us a call at 1-800-306-6010 or contact us online.
