Can a Mississippi county put leftover insurance money into the general fund after a covered building has been fully repaired?

Plain-English summary

Bolivar County had a county-owned building damaged by some covered loss. The insurance carrier paid out, the county fixed the building, and money was left over. The board of supervisors wanted to know whether the surplus could be moved to the county general fund for general purposes, or had to stay tied to the damaged property.

The AG said the surplus stays with the property. Mississippi Code Section 19-7-7 lets counties insure their public property. The Mississippi Supreme Court interpreted that statute long ago in Adams v. Helms (1909), holding that insurance proceeds are not general fund money. They are a trust fund, dedicated to replacing or restoring the destroyed property as long as the county still needs that asset. The AG read that holding to extend to surplus left over after a completed repair: the money stays in trust for the repair, maintenance, or improvement of that covered facility.

The AG also flagged two procedural points. First, the office cannot interpret the terms of an insurance policy, so any policy-specific question goes to the carrier. Second, for guidance on the mechanics of expenditure, the AG referred the county to the Department of Audit's Technical Assistance Division.

What this means for you

For county boards of supervisors and county clerks

The opinion holds that the board does not have authority to deposit surplus insurance proceeds into the county general fund. Under Section 19-7-7 as interpreted in Adams v. Helms, insurance proceeds for a damaged county building are "a trust fund, to be used only for the purpose of replacing the property destroyed, so long as the county stands in need of the thing so destroyed," and the AG concluded the board "must maintain the insurance proceeds in trust for the repair, maintenance, and improvement of the covered facility."

For finance directors and county auditors

The opinion holds that surplus insurance proceeds retain their trust character even after the immediate repair is complete; they remain restricted to the repair, maintenance, and improvement of the covered facility rather than becoming general-fund money. The AG referred the county to the Technical Assistance Division of the Department of Audit for guidance on the proper expenditure of public funds.

For county attorneys

The opinion holds that the trust-fund rule from Adams v. Helms governs the surplus and bars a general-fund transfer. It also notes a limit on its own scope: under Section 7-5-25 the AG "cannot by official opinion interpret the terms or provisions of an agreement or contract," so any policy-specific question goes to the property insurance carrier.

Common questions

What if the building is no longer needed?
The opinion quotes Adams v. Helms, which framed the trust character in conditional terms: the funds are reserved for the destroyed property "so long as the county stands in need of the thing so destroyed." The opinion did not address what happens if the county no longer needs the asset.

What can the surplus be used for?
The opinion holds the board must maintain the proceeds "in trust for the repair, maintenance, and improvement of the covered facility." It does not authorize use for general county purposes or other facilities.

Can the AG tell the county whether its specific policy allows a different use?
No. The opinion holds the AG "cannot by official opinion interpret the terms or provisions of an agreement or contract," and referred the board to its property insurance carrier for any policy-specific question.

Background and statutory framework

Mississippi Code Section 19-7-7 authorizes counties to insure public property, including county-owned buildings, against loss. The statute does not by itself say what happens to the proceeds.

The Mississippi Supreme Court answered that question in Adams v. Helms, 48 So. 290 (Miss. 1909). The court held that insurance proceeds are not part of the county general fund but instead are a trust fund, "to be used only for the purpose of replacing the property destroyed, so long as the county stands in need of the thing so destroyed." That trust character carries through to the surplus left after a completed repair: the AG concluded the board must maintain the proceeds in trust for repair, maintenance, and improvement of the covered facility.

The AG declined to interpret the underlying insurance policy because Section 7-5-25 limits the office to prospective state-law questions, not contract interpretation. For policy-specific guidance, the county should consult the carrier. For the mechanics of expending county funds, the Department of Audit's Technical Assistance Division is the right resource.

Citations

• Miss. Code Ann. § 19-7-7 (county insurance authority for public property)
• Miss. Code Ann. § 7-5-25 (scope of AG opinions)
• Adams v. Helms, 48 So. 290, 291 (Miss. 1909) (insurance proceeds as trust fund for property replacement)
• MS AG Op., Welch (June 23, 2021) (AG cannot interpret contract terms)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2025/02/S.-Morris-Harris-February-19-2025-Surplus-Insurance-Proceeds.pdf

Original opinion text

February 19, 2025

Stephanie Morris-Harris, Esq.
Attorney, Bolivar County Board of Supervisors
Post Office Box 698
Cleveland, Mississippi 38732

Re: Surplus Insurance Proceeds

Dear Ms. Morris-Harris:

The Office of the Attorney General has received your request for an official opinion.

Background

Bolivar County ("County") owns a facility, covered by an insurance policy, that was damaged. The County filed a claim under the insurance policy, and funds were paid to the County for repairs. Once full repairs were made to the covered facility, surplus insurance proceeds were left over.

Questions Presented

Does the Bolivar County Board of Supervisors ("Board") have the authority to deposit the surplus insurance proceeds into its general fund for general county purposes, or must the Board only use the surplus insurance proceeds towards the repair, maintenance, or improvement of the covered facility?

Brief Response

The Board does not have the authority to deposit the surplus insurance proceeds into the county general fund.

Applicable Law and Discussion

As an initial matter, the Office of the Attorney General is authorized to issue opinions on prospective questions of state law only, in accordance with Mississippi Code Annotated Section 7-5-25. Our office "cannot by official opinion interpret the terms or provisions of an agreement or contract or infer facts that may be relevant to our opinion." See MS AG Op. Welch at *1 (June 23, 2021). For further guidance on any applicable provisions of the County's insurance policy, we refer the Board to its property insurance carrier.

Section 19-7-7 authorizes counties to insure certain public property, including county-owned buildings, against loss. The Mississippi Supreme Court interprets Section 19-7-7 such that insurance proceeds are not a part of the county general fund but instead are "a trust fund, to be used only for the purpose of replacing the property destroyed, so long as the county stands in need of the thing so destroyed." Adams v. Helms, 48 So. 290, 291 (Miss. 1909).

Therefore, state law dictates that the Board must maintain the insurance proceeds in trust for the repair, maintenance, and improvement of the covered facility.

For further guidance regarding the proper expenditure of public funds, we refer you to the Technical Assistance Division of the Department of Audit.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By: /s/ Caleb A. Pracht
Caleb A. Pracht
Special Assistant Attorney General