DEFINITION of 'Cumis Counsel'

Cumis Counsel is legal counsel chosen by the insured when the insurer has a conflict of interest. Cumis counsel takes its name from San Diego Navy Federal Credit Union v. Cumis Insurance Society, Inc., a 1984 court case in California that established the insured’s right to independent counsel.

BREAKING DOWN 'Cumis Counsel'

When an insurance company underwrites a new policy it not only agrees to protect the insured from losses, but also to defend the insured against any claims. The insurer is able to control the defense of the insured by selecting the defense counsel. In most cases this is permissible because both the insured and the insurer have the same interest which is defeating the claim or limiting the amount of losses that the claim can cause. In other cases, however, the interests of the insured and the insurer are not the same.

Conflicting Interests

One way that an insurer’s interest may differ is if the insurer issues a reservation of rights statement leading up to the court case. The reservation of rights allows the insurer to deny coverage at a later date, and is used if information comes out during the case that suggests that the insured was guilty of an action that was not covered by the policy. The reservation serves as an indicator that the insurer will not seek to vigorously defend the insured since it doesn’t intend on having the insured as a client in the future.

When there is not a conflict of interest, the insurer will pay for the defense of the insured. This same right extends to the insured if there is a conflict of interest. If a claim is made against the insured, the insurer can either sue the insured and receive a declaration of no coverage, agree to defend the insured regardless of the estimated outcome, or issue a reservation of right and allow the insured to choose an independent counsel.

Courts have subsequently narrowed the circumstances in which a Cumis counsel is needed, ruling that not every conflict of interest entitles an insured to insurer-paid independent counsel. "For example, the court advised that where the coverage issue is independent of, or extrinsic to, the issues in the underlying case, or where the damages are only partially covered by the policy, there is no right to Cumis counsel. Rather, it is only when there is a reservation of rights and the outcome of that coverage issue can be controlled by the defense counsel retained by the insurer is independent counsel required to be appointed," writes attorney Larry Golub on

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