No Right to Waive Subrogation

Insured May Not Deprive Insurer of Right to Subrogation

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Following a vehicular accident, Martin Peteet entered into a release and settlement agreement with the driver of the other vehicle and her insurer. Peteet did not seek a waiver of subrogation or consent from his own automobile insurer, Mississippi Farm Bureau Casualty Insurance Company (Farm Bureau), prior to executing the release and settlement agreement. After the release and settlement agreement was executed, Peteet filed a complaint against Farm Bureau, seeking damages under the uninsured motorist (UM) provision in his auto policy with Farm Bureau. Farm Bureau moved to dismiss the complaint, and the county court denied the motion.

In Mississippi Farm Bureau Casualty Insurance Company v. Martin Peteet, No. 2021-IA-01420-SCT, Supreme Court of Mississippi (April 6, 2023) the Supreme Court of Mississippi resolved the dispute.


Martin Peteet was injured in a two-vehicle accident with Maurisha Bland. After the accident Peteet entered into a Full, Final and Absolute Release of All Claims, Settlement and Indemnity Agreement (the Agreement) with Bland and her insurer, Mountain Laurel Assurance Company (Mountain Laurel), in exchange for $25,000. Peteet filed a complaint against his own insurer, Farm Bureau, alleging that Farm Bureau breached its contract with Peteet.

Peteet argued that the UM provision in his auto policy with Farm Bureau covered up to $50,000 per accident and was intended for this exact purpose. Since Peteet received only $25,000 in the Agreement-Bland’s policy limit with Mountain Laurel-he argued that the remainder of his damages from the accident should be paid to him by Farm Bureau under the auto policy’s UM provision.

Farm Bureau moved to dismiss the complaint for failure to state a claim. Farm Bureau argued that since Peteet had entered into the Agreement with Bland and Mountain Laurel without first seeking a waiver of subrogation or other consent from Farm Bureau, Peteet was barred from proceeding against Farm Bureau under his UM coverage. Mississippi law established Farm Bureau had a right of subrogation and that Mississippi caselaw supported its position that cutting off the insurer’s right of subrogation prohibited the insured from further proceeding against the insurer for a claim under the insurance policy.


Farm Bureau argued that the Agreement executed between Peteet, Bland and Mountain Laurel cut off its subrogation rights-which it is entitled to statutorily and contractually-and barred Peteet from proceeding against Farm Bureau for damages under the UM coverage.

Aside from the contractual requirements to give consent to any settlement of claims and to be subrogated to an insured’s right to recover, Mississippi Code Section 83-11-107 provides that an insurer has a right to subrogation.

The law has long been established in the state of Mississippi the insurer is prohibited from proceeding against the tortfeasor, the insured has no further rights to proceed against the insurer. The Supreme Court has stated that an insured who executes a settlement and release agreement with an uninsured motorist-effectively cutting off their own insurer’s right of subrogation-cannot then proceed against their own insurer.

Subrogation is the substitution of one person in place of another. He who is substituted succeeds to the rights of the other in relation to the debt or claim, and to its rights, remedies, or securities.


Farm Bureau had a right of subrogation by statute and contract. The execution of the Agreement between Peteet, Bland and Mountain Laurel cut off Farm Bureau’s right of subrogation without Farm Bureau’s consent.

Farm Bureau, therefore, has no duty to pay for Peteet’s claim under the UM provision. The Supreme Court reversed the trial court’s denial of the motion to dismiss and rendered judgment in favor of Farm Bureau.


Farm Bureau’s policy required the insured to protect its right of subrogation as did a Mississippi statute. Peteet released the person responsible and, in so doing, deprived his insurer of its right of subrogation and, by so doing, destroyed his right to seek indemnity for underinsured motorist coverage. Failing to protect the rights of his insurer cost Mr. Peteet $25,000. Mr. Peteet forgot that the covenant of good faith and fair dealing applies equally to him as it does to his insurer. He may not be without a remedy if the agreement to the release was based on the advice of counsel that violated the policy terms and the state statute.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at and

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An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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