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Independent Counsel Required: Nevada Supreme Court Follows California’s “Cumis Counsel Rule”

www.insurereinsure.com
September 25, 2015

The Nevada Supreme Court has found that an insurer must provide independent counsel for its insured when a conflict of interest arises between the insurer and the insured, adopting California’s “Cumis Counsel” rule. While Nevada law allows “dual representation” such that insurer-appointed counsel represents both the insurer and the insured, that is not permissible when the insurer and insured have opposing legal interests. In those instances, Nevada law requires the insurer to satisfy their contractual duty to defend their insured by allowing the insured to select their own independent counsel at the insurer’s expense. Also, although noting a divide among different jurisdictions’ decisions, the court held that independent counsel is only required when there is an “actual conflict” between the insurer’s and insured’s interests and that a reservation of rights letter does not create a “per se conflict of interest.” The court’s opinion in State Farm Mut. Auto. Ins. Co. v. Hansen can be found here.

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