Concede duty to defend and disqualifying conflict

USE NOTES: This Model Letter assumes that the insurer the insurer previously sent a reservation of rights letter that agrees to pay for the policyholder’s defense, but denies that it has any duty to defend. It should be signed by the policyholder, as the contracting party to whom the insurer owes fiduciary-like duties. It should not be signed by independent counsel to whom the insurer owes no duties. The protection of Civil Code § 2860 may depend upon the insurer’s unqualified acceptance of the existence of a duty to defend and a disqualifying conflict of interest. Adapt the letter below by using the Legend. Before sending the text below, delete everything above this line.





City, State Zip Code

Re:       &Plaintiff& v. &Client&

Your Claim No. ___

Dear &ClmAgt&:

Your reservation of rights letter of &Date& is confusing to me. On the one hand &InsCo& agrees to defend me in the &Plaintiff&’s lawsuit, but on the other hand it says that it denies that it has any duty to defend me. This seems to create a conflict of interest between us.

Does &InsCo& unconditionally agree that the provisions of its policy of insurance impose upon it a duty to defend me in the &Plaintiff&’s lawsuit? If not, why not?

Does &InsCo& unconditionally agree that a conflict of interest has arisen which creates a duty on its part to provide independent counsel to me? If not, why not?

Does &InsCo& unconditionally agree that it will provide independent counsel to represent me in the &Plaintiff&’s lawsuit? If not, why not?

Please furnish me within 15 days a complete response based on all facts now known to you as required by Cal. Code Regs. § 2695.5(b).

Attached is a memo I got off of the internet.

Very truly yours,


cc: &DependentCounsel&




“When coverage is disputed, the interests of the insured and the insurer are always divergent.” (San Diego Navy Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 375 (Cumis).) “Conflict of interest between jointly represented clients occurs whenever their common lawyer’s representation of the one is rendered less effective by reason of his representation of the other.” (Spindle v. Chubb/Pacific Indemnity Group (1979) 89 Cal.App.3d 706, 713.) “[O]nce the insurer decides to assert a coverage defense, the same attorney may not represent both the insured and the insurer.” (Cumis, supra, 162 Cal.App.3d at 374.)


Civil Code § 2860 creates certain rights and obligations among an insurer, the policyholder and their lawyer if the existence of a duty to defend and the existence of a disqualifying conflict of interest are irrevocably established. “[I]n the absence of a stipulation or unconditional agreement between the insurer and insured, unless and until there has been a judicial determination of an insurer’s duty to defend and the existence of a conflict of interest, the provisions of Civil Code section 2860 are inapplicable.” (Handy v. First Interstate Bank (1993) 13 Cal.App.4th 917, 926.)


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