IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MARIE SAINT HILAIRE, Individually :

and as Wife and Administratrix of the : K16C-12-026 JJC

Estate of Therisson Augustin, and : In and For Kent County

MARCEA AUGUSTIN, and EDNEST :

AUGUSTIN, :

Plaintiffs, :

 :

v. :

 :

MARTHA IRENE GONZALEZ :

LANKFORD, and UNITED FARM :

FAMILY INSURANCE COMPANY, :

 :

Defendants. :

Submitted: December 15, 2017

Decided February 6, 2018

MEMORANDUM OPINION AND ORDER

Upon the Parties’ Claims for Declaratory Relief

Keith E. Donovan, Esquire & Reneta L. Green-Streett, Esquire, Morris James, LLP, 

Dover, Delaware, Attorneys for the Plaintiff.

David C. Malatesta, Jr., Esquire, Kent & McBride, P.C., Wilmington, Delaware, &

Margaret Fonshell Ward, Esquire, Ward & Herzog, LLC, Baltimore, MD, Attorneys

for the Defendants.

Clark, J.
2

This matter involves a declaratory judgment action regarding parties’ rights 

under an umbrella policy. The insured, an alleged tortfeasor in an automobile 

accident, did not obtain underlying primary automobile bodily injury coverage at the 

level required by the umbrella policy. As a result, the umbrella insurer argues that 

it has no coverage obligations. The injured parties (based on an assignment of rights

by the insureds) counter that the policy’s language provides for this contingency and 

that umbrella coverage is nevertheless triggered. 

For the reasons discussed below, under Maryland law and based on 

uncontroverted stipulated facts, the policy directly addresses the issue. Namely, it

provides that the injured parties, now by assignment, have up to one million dollars 

of umbrella coverage available. The insurer’s obligation to indemnify its insured

and thus compensate the injured parties, however, is not triggered unless and until 

the value of the injured parties’ claims are fixed by verdict or settlement to exceed 

$250,000. In the event damages exceed that amount, the injured parties must absorb 

the gap in coverage and are due no compensation from Farm Family for any final 

damages fixed at less than $250,000.

I. Background

A. Stipulated Facts

The parties stipulated to the following facts in support of their joint request 

that the Court decide this matter on the briefing. The parties also agree that 

Maryland law applies. On December 30, 2014, Defendant Martha Irene Gonzalez 

Lankford (hereinafter “Mrs. Lankford”) left a stop sign and entered a roadway in

Sussex County. She pulled into the path of Plaintiff Therisson Augustin’s 

(hereinafter “Mr. Augustin’s”) vehicle and the two vehicles collided. Mr. Augustin 

suffered injuries and later died as a result of the collision. Presently, the parties 

include his estate and those allegedly injured as a result of his death (hereinafter “the 
3

injured parties”) and Defendant United Farm Family Insurance Company 

(hereinafter “Farm Family”). 

At the time of the collision, Farm Family provided Mrs. Lankford’s vehicle

with $100,000 per person bodily injury coverage. Also at the time of the collision,

Mrs. Lankford lived with her husband’s father, Robert Lankford (hereinafter “Mr. 

Lankford”), in Delmar, Maryland. At that time, Farm Family separately insured Mr. 

Lankford under a policy that provided one million dollars in umbrella coverage. The 

parties stipulate that Mrs. Lankford qualified as an insured under her father-in-law’s

Farm Family umbrella policy.

In 2015, the injured parties partially settled their claims against Mrs. 

Lankford. Pursuant to the settlement, the injured parties accepted the $100,000 in 

underlying policy limits.

1

 In exchange, they (1) released Mrs. Lankford from all

further personal liability, and (2) Mr. and Mrs. Lankford assigned all of their rights 

in the Farm Family umbrella policy to the injured parties.2

Farm Family denied coverage under its umbrella policy because Mrs. 

Lankford secured only $100,000 per person bodily injury coverage rather than the 

$250,000 per person coverage required by the umbrella policy. In response, the 

injured parties (pursuant to the assignment of rights), claim that although Mrs. 

Lankford did not secure and exhaust the limits identified in the umbrella policy’s 

declaration page, the policy provides for this contingency and coverage is triggered 

nevertheless. In the alternative, the injured parties argue that the policy is ambiguous 

and, under Maryland law, it should be interpreted against its drafter. 

 

1 Mr. Augustin’s personal State Farm policy provided $15,000 in underinsured motorist coverage 

for the accident which was tendered and accepted. Neither party argues that Mr. Augustin’s State 

Farm coverage is relevant to this coverage dispute.

2 The parties did not include a copy of the assignment in the record. The stipulated facts provide 

that the assignment is valid and accordingly the Court’s reasoning is based upon the premise that 

it is unqualified. The release signed by the injured parties was also not included in the record. 
4

B. The Terms and Conditions of the Umbrella Policy

The parties included a complete copy of the umbrella policy with the stipulation 

of facts. The declaration page, in the only portion in all capitals, bolded and 

italicized, provides:

TO AVOID GAPS IN COVERAGE, YOU MUST MAINTAIN THE 

MINIMUM LIMTS OF LIABILITY STATED BELOW ON ALL 

PRIMARY INSURANCE POLICIES WHICH APPLY TO YOU

(emphasis omitted).

The declaration page then lists bodily injury limits of $250,000 per person as 

“primary insurance requirements.”

Part II of the umbrella policy, discussing coverage, provides that:

We will pay on an INSURED’S behalf DAMAGES for which an 

INSURED becomes legally responsible due to PERSONAL INJURY 

or PROPERTY DAMAGE caused by an OCCURANCE. This 

coverage applies only to DAMAGES in excess of the PRIMARY 

INSURANCE or the RETAINED LIMIT3, whichever applies.

The policy defines primary insurance as “any insurance collectible by the INSURED 

which covers the INSURED’S liability for PERSONAL INJURY or PROPERTY 

DAMAGE.” The definition of primary insurance does not reference the amount of 

coverage necessary other than to refer to that which is “collectible.” Germanely, this

definition of primary insurance, which is used throughout the policy, does not 

reference a minimum amount of underlying coverage. In addition, Part VII. 5. 

provides that “[t]his insurance [the umbrella coverage] is excess over other 

collectible insurance.”

Next, Part IV of the policy, discussing limits of liability, provides that:

Regardless of the number of INSUREDS, claims or injured persons, the 

maximum we pay as DAMAGES resulting from one OCCURENCE 

shall not exceed the amount stated in the declarations page, subject to 

the following:

 

3 The parties agreed that the retained limit contingency does not apply in this case. 
5

1. This policy only pays after the limits of the PRIMARY 

INSURANCE and excess insurance, and any other 

PRIMARY INSURANCE and excess insurance covering 

the claim, have been paid by you or on your behalf.

2. If the PRIMARY INSURANCE terminates or if the limits 

are less than the limits show in the declarations page, 

we pay DAMAGES we would have paid as if the

PRIMARY INSURANCE had not been terminated or if 

its limits had not been less than the limits shown in the 

declaration page (emphasis added).

Finally, Part V of the policy, discussing primary insurance requirements, provides

that:

This policy requires that all INSUREDS have and maintain the 

PRIMARY INSURANCE coverage at or above the limits of liability 

shown on the declarations page. ... If the PRIMARY INSURANCE does 

not provide at least the limits indicated, you will be responsible for the 

loss up to the required limits. We only pay for the amount of loss 

which is: 

1. above the required PRIMARY INSURANCE limits, and 

2. above any other insurance collectible for an occurrence. 

(emphasis added)

As stated previously, the definition of “primary insurance”, which is used in the 

provisions discussed above, does not include a defined amount of underlying 

coverage. The definition refers only to “any insurance collectible by the insured.” 

Separate from that definition inserted throughout the policy, Part V of the policy

places an independent obligation upon the insured to maintain the $250,000 per 

person bodily injury coverage referenced in the declaration page. 
6

II. Applicable Standards and Maryland’s Rules of Contract 

Construction

The parties jointly submitted this matter to the Court for resolution based on 

stipulated facts and a complete copy of the umbrella policy. Accordingly, the Court 

will consider the matter to be submitted for decision pursuant to cross-motions for 

summary judgment.4 Specifically, the parties request the Court to issue a declaration 

pursuant to 10 Del. C. Ch. 65 5 regarding the coverage provided under the umbrella 

policy and to what extent, if any, it must be paid pursuant to the terms and conditions 

of the policy. In such matters, the Court is given the statutory power to construe 

questions of “construction or validity arising under [a] contract . . . and [to provide]

a declaration of rights, status or other legal relations thereunder.”6 Furthermore, an 

“actual controversy” must exist before a Delaware court may exercise its jurisdiction 

to issue a declaratory judgment.7

In issuing a declaratory judgment regarding the parties’ rights and obligations 

under the contract, the Court must interpret the contract. Under Maryland Law, 

insurance policies are construed like any other contract.8 Construction of insurance 

policies is governed by a few well-established principles.9 Unless a statute, 

regulation, or public policy would be violated, the first principle of construction of 

 

4

See Super. Ct. Civ. R. 56(h) (providing where “the parties . . . have not presented argument to 

the Court that there is an issue of fact . . . the Court shall deem the motion to be the equivalent of 

a stipulation for decision on the merits based on the record submitted with the motion.”).

5 Relevant to the case at hand is 10 Del.C. § 6503’s recognition that pursuant to the declaratory 

judgment Act, a “contract may be construed either before or after there has been a breach thereof.” 

6

10 Del. C. § 6502.

7 XI Specialty Ins. Co. v. WMI Liquidating Trust, 93 A.3d 1208, 1217 (Del. 2014).

8 Empire Fire & Marine Insurance Co. v. Liberty Mutual Insurance Co., 699 A.2d 482, 493 (Md. 

Ct. Spec. App. 1997)(citing North River Ins. Co. v. Mayor & City Council of Balto., 343 Md. 34, 

680 A.2d 480 (Md. 1996); Government Employees Ins. Co. v. Harvey, 278 Md. 548, 366 A.2d 13 

(Md. 1976); Bond v. Pennsylvania Nat'l Mut. Cas. Ins. Co., 289 Md. 379, 424 A.2d 765 (Md. 

1981)).

9

Id. (citing Pacific Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486, 

488 (Md. 1985)).
7

insurance policies in Maryland is to apply the terms of the contract.10 This principle 

serves to achieve the touchstone of policy construction -- to ascertain and effectuate 

the intent of the parties to the agreement.11 To divine properly the parties' intent, the 

policy is viewed as a whole, without emphasis being placed on particular 

provisions.12 Whenever possible, each clause, sentence, or provision shall be given 

force and effect.13 With the exception of expressly defined terms, the language used 

in the policy must be given its ordinary and usually accepted meaning.

14

III. Discussion

A. The Parties Competing Interpretations of the Umbrella Policy

The injured parties focus on Part IV of the policy, and assert that the policy 

expressly contemplates a situation where the insured maintains primary insurance of 

less than the limits required by Part V. In such an event, they emphasize that Part 

IV of the policy provides that Farm Family must pay limits “as if the primary 

insurance ... limits had not been less than the limits shown in the declaration page”. 

The injured parties argue that this language requires the umbrella policy to drop 

down to the lower limits, and Farm Family is liable for losses exceeding the 

$100,000 paid by the primary policy. According to the injured parties, a drop down 

 

10 Mutual Fire, Marine & Inland Ins. Co. v. Vollmer, 508 A.2d 130, 133 (Md. 1986).

11 Empire Fire, 699 A.2d at 493 (1997)(citing Aragona v. St. Paul Fire & Marine Ins. Co., 281 

Md. 371, 375, 378 A.2d 1346, 1348-49 (Md. 1977); Schuler v. Erie Ins. Exch., 81 Md. App. 499, 

568 A.2d 873, cert. denied, 319 Md. 304, 572 A.2d 183 (1990)).

12 Id. (citing Sullins v. Allstate Ins. Co., 340 Md. 503, 667 A.2d 617 (Md. 1995); Nolt v. United 

States Fidelity & Guar. Co., 329 Md. 52, 617 A.2d 578 (Md. 1993); Simkins Indus., Inc. v. 

Lexington Ins. Co., 42 Md. App. 396, 401 A.2d 181, cert. denied, 285 Md. 730 (Md. Ct. Spec. 

App. 1979).

13 Id. at 494 (citing Pacific Indem, 488 A.2d 486, 488 (Md. 1985); Truck Ins. Exch. v. Marks 

Rentals, Inc., 288 Md. 428, 418 A.2d 1187 (Md. 1980); Gottlieb v. American Auto. Ins. Co., 177 

Md. 32, 7 A.2d 182 (Md. 1939)).

14 Aragona, 378 A.2d at 1348 (Md. 1977)(citing U.S.F. & G. v. Nat. Pav. Co., 228 Md. 40, 178 

A.2d 872 (Md. 1962); John Hancock Mut. Life Ins. Co. v. Plummer, 181 Md. 140, 28 A.2d 856 

(Md. 1942); C & H Plumbing v. Employers Mut., 264 Md. 510, 287 A.2d 238 (Md. 1972); State 

Farm Mutual v. Treas., 254 Md. 615, 255 A.2d 296 (Md. 1969)).
8

of coverage is mandated by this provision and to not do so, would give no effect to 

that provision. 

Farm Family counters that the policy does not drop down to cover the gap 

between the primary and umbrella policies. In this regard, it argues that the primary 

limits of $250,000 must be actually paid before the umbrella policy is triggered. For 

this premise, Farm Family relies heavily on what it asserts is a general understanding 

regarding obligations of excess and umbrella insurers. With regard to the policy 

language, it focuses on Part V of the policy that requires the insured by reference to 

the declaration page, to maintain $250,000/$500,000 in primary bodily injury 

coverage. Farm Family also focuses on a provision that it argues does not permit 

one to waive the recovery of a gap between the amount recovered and the required 

primary coverage amount. Namely, the policy provides that “if the primary 

insurance does not provide at least the limits indicated, you will be responsible for 

the loss up to the required limits”. In the context of this case, Farm Family asserts

that such language required Mrs. Lankford, or someone on her behalf, to actually 

pay the $150,000 gap necessary to trigger Farm Family’s obligation under its 

umbrella policy. 

B. The Policy’s provisions, when read as a whole, require Farm Family to 

provide coverage if the insured’s legal liability for damages exceeds 

$250,000.

The parties generally agree that this issue is one of first impression under 

Maryland law. As a threshold matter, the Court finds there to be an actual 

controversy regarding this policy’s construction. Accordingly, in issuing a 

declaratory judgment, the Court must decide the matter as it predicts a Maryland 

Court would after applying Maryland law.

At the outset, the Court recognizes the competing provisions in the policy that 

produce the tension at issue. The only way to read these provisions together as a 

whole and give effect to each of them, leads to the conclusion that Farm Family’s 
9

coverage obligation is conditionally triggered. The policy provides (1) the insured 

had the obligation to purchase $250,000 of relevant underlying coverage, and (2) the 

consequence if the insured did not purchase that amount. Namely, the consequences 

of Mrs. Lankford’s failure is Farm Family’s relief from its duty to indemnify Mrs. 

Lankford for damages fixed at less than $250,000. Since the policy provides that 

the insured must absorb this gap, the injured parties, as assignees, must likewise 

absorb this gap. This will result in a credit of $150,000 toward any damages 

ultimately assessed over $100,000 in the tort action. Accordingly, Farm Family’s 

obligation to indemnify its insured cannot be determined until final disposition of an 

underlying action that fixes the amount of damages. 

Turning to the policy’s language, Part V’s requirement for an amount of 

underlying coverage is coupled with a provision that provides the consequence for 

not doing so. Namely, Part V expressly provides that if the insured does not obtain 

the full amount of coverage, then Farm Family “will only pay for the amount of the 

loss which is: 1. [a]bove the required primary insurance limits; and 2. [a]bove any 

other insurance collectible for an occurrence.” Accordingly, the plain language of 

Part V provides for the contingency at issue. When an insured does not obtain the 

required amount of primary insurance, Farm Family need only indemnify the insured 

for damages fixed above $250,000. 

This outcome is also consistent with Part IV of the policy. That provision 

clearly provides that if the insured obtains less than the required underlying 

coverage, then Farm Family must provide indemnity coverage, but only in an 

amount as “if its limits had not been less than the limits shown in the declaration 

page”. In the unrelated circumstance involving an underlying insurer’s insolvency, 

Part IV separately, though consistently provides that if the primary insurer does not 

pay the full $250,000, then Farm Family assumes the obligation to pay damages that 
10

“exceed the required limits of the primary insurance as shown in the declarations 

page.” 

Lastly, the language in the umbrella policy’s declaration page addresses the 

same contingency. Namely, it provides that to avoid “gaps” in coverage, the insured 

must maintain the minimum limits of liability stated below. “Gap” is not defined in 

the policy, but use of that term is consistent with other provisions in the policy. A

gap in coverage would mean coverage before (through whatever primary limits are 

available) and after (through the umbrella policy), but not in between. To the extent 

one of the parties, or both believe such a construction is not practical, a reading 

otherwise would not give force and effect to all terms in the policy.

The injured parties argue that Part IV requires Farm Family’s coverage 

obligation to completely drop down and provide coverage for all damages in excess 

of $100,000. In order to give effect to all provisions in the policy, the injured parties’

reading is also incorrect. Namely, the Court must give effect to Part V’s language 

imposing the consequence that Farm Family need only provide coverage at a level 

equivalent to what would be necessary if the insured obtained the full underlying 

coverage. Part IV also recognizes that Farm Family need only pay damages at the 

level it would have been required to if the insured fully met her obligations.

Much of Farm Family’s argument in this case focuses on what it asserts is the 

general rule regarding drop down coverage requirements. At the outset, the cases 

relied upon by Farm Family are primarily cases involving excess insurance policies 

as opposed to umbrella polices. There is a difference.15 In addition, a “general rule” 

and “common understanding” of what triggers an excess policy or an umbrella 

policy have never been held to control over the express language of the policy. 

 

15 See 4 NEW APPLEMAN ON INSURANCE LAW § 24.02[3], at 24-11(Library Ed. 2017)

(explaining that an “umbrella policy differs from an excess policy in a critical aspect: an umbrella

policy typically insures against certain risks that a concurrent primary policy does not . . . An 

umbrella policy is thus a “gap filler” . . . by design it provides first dollar coverage where a primary 

policy or excess policy does not.”).
11

Farm Family references no provision in its policy that provides that a failure 

to obtain the listed underlying limits results in umbrella coverage not being 

triggered. Nor has the Court located any such provision. Accordingly, the policy 

provides that Farm Family’s indemnification obligation is triggered if and when 

damages in amounts over $250,000 are assessed through its settlement with the 

injured parties or by verdict. In such an event, Farm Family must receive a credit 

for any settlement or judgment in the amount of $150,000. Thereafter, Farm Family 

must provide up to one million dollars in coverage if warranted by the damages.16

The Court finds another jurisdiction’s decision in Cincinnati Ins. Co. v. 

Franck17 to be informative and persuasive. In Franck, the Court of Appeals of 

Minnesota held that an umbrella policy provided coverage when the insured settled 

for less than the primary policy limits because there was no language in that policy 

that required primary insurance to be exhausted.18 The Franck court examined

Cincinnati Insurance’s policy and recognized, as here, that there was no policy 

language requiring exhaustion of a particular amount of primary insurance.19 In 

such an instance, the Franck court held that the injured party must absorb the gap 

between the settlement amount and the primary policy limits identified in the 

declaration page.20 In other words, the Court found that indemnity coverage (1) was 

triggered with (2) the umbrella carrier due a credit for the “gap.”

As in Franck, this case involves injured parties and an insured partially 

settling claims for less than the primary policy limits required by the umbrella policy. 

This creates a gap between the primary policy and the umbrella policy. The policy 

 

16 By way of example, if the injured parties’ ultimate recovery were to be $250,000, Farm Family 

would provide no additional indemnity coverage. If damages were to become fixed at $1,250,000

or greater, then Farm Family would be required to indemnify Mrs. Lankford with the entire 

$1,000,000 policy limits. 

17 644 N.W. 2d 471 (Minn. Ct. App. 2002).

18 Id. at 473.

19 Id. 

20 Id. at 476.
12

at issue in Franck contained a provision that the “[insurer] will pay only the amount 

which is more than the required basic policy limits and more than any other 

collectible insurance”, which is substantially similar to Part V of the Farm Family

policy. Part V of Farm Family’s policy, in comparison, provides that “if the 

PRIMARY INSURANCE does not provide at least the limits indicated, [the insured]

will be responsible for the loss up to the required limits. [Farm Family] only pays

for the amount of loss which is ... above the required PRIMARY INSURANCE 

limits.” Moreover, like Maryland, Minnesota law dictates that its courts must 

construe insurance policies according to their terms, giving policy language its 

ordinary and usual meaning to give effect to the parties’ intent as it appears from the 

contract.21 Also, as in Franck, the Farm Family policy at hand contains no policy 

language requiring the exhaustion of the underlying policy at a set amount in order 

to trigger coverage. 

Farm Family argues that providing coverage in this instance would result in a 

significant increase in premiums for umbrella policies. At the outset, Farm Family 

drafted the policy and if it was its intent to provide for an exhaustion or trigger 

requirement, it should have included a provision requiring it. In any event, enforcing 

the provisions of this policy does not markedly change the risk for the insurer. Farm 

Family is still due the benefit of the required $250,000 in underlying coverage, but 

cannot avoid all obligations under its policy in the absence of language absolving it 

from its coverage obligations.

This Court also finds persuasive the public policy consideration discussed in 

Franck regarding whether permitting plaintiffs to settle for less than primary policy 

limits would incentivize token settlements. The Franck Court observed that it would 

not, because allowing plaintiffs to voluntarily “swallow the gap” between 

 

21 Id. at 473 (citing Dairyland Ins. Co. v. Implement Dealers Ins. Co., 494 Minn. 236, 244-45, 199 

N.W. 2d 806, 811 (Minn. 1972)).
13

settlements would be against their own self interests.22 This Court’s decision that 

Farm Family is liable for losses exceeding $250,000 does not alter the deal they 

bargained for, and would not incentivize insureds to maintain policy limits lower 

than those required by umbrella policies or settle with other insurers for less than 

policy limits.

Although both parties agree that this is an issue of first impression in 

Maryland, at oral argument, Farm Family argued that two Federal District Court of 

Maryland cases addressed similar issues. Both are distinguishable. Neither case 

addresses the policy language present in the Farm Family umbrella policy. One of 

the two cases involved an excess policy as opposed to an umbrella policy. 

First, Farm Family cites Highlands Ins. Co. v. Gerber Products Co. 23 That 

case evaluated an excess insurance policy as opposed to an umbrella policy. Its 

general rule that “excess carriers ordinarily are not required to provide drop-down 

coverage . . .”24 is not helpful in this case involving an umbrella policy. Furthermore, 

Gerber is distinguishable because the policy at issue did not define the underlying 

insurance requirement to include that which is “collectible.” 25 The Federal District 

Court of Maryland noted that this definition of primary coverage was not present in 

the Highlands policy.26 To the contrary, the Farm Family policy defines primary 

insurance as “any insurance collectible by the insured.” Accordingly, “collectible” 

is the operative term in the definition of primary insurance, which is in turn plugged 

into the balance of the policy without reference to the declaration page’s underlying 

coverage amount requirements. 

 

22 Id. (citing Drake v. Ryan., 514 N.W. 2d 785, 789)(Minn. 994)).

23 702 F. Supp. 109, 112 (D. Md. 1988). 

24 Id. at 112. 

25 Id.

26 Id. The injured parties also rely on Gerber because it references its policy’s failure to include 

references to “collectible insurance” as does Farm Family’s. They argue that this alternatively 

makes the policy ambiguous. Since the Court does not find the policy to be ambiguous, it declines

to address this argument.
14

Second, Farm Family cites the Maryland Federal District Court decision in 

McGirt v. Royal Ins. Co. of America27 which is also distinguishable. At the outset, 

that decision seemed to acknowledge a general rule that umbrella polices are more 

likely to drop down and provide coverage than excess policies.

28

 In the case at hand, 

Farm Family, rather than advocating the general rule for umbrella coverage

discussed in the case it cites, advocates the general rule for excess insurers. Its 

argument also does not adequately recognize the Royal Insurance policy language 

in that case. Namely, Royal involved a bankruptcy of an underlying carrier, and the 

policy contained a provision that specifically addressed the bankruptcy.29 Though 

Farm Family easily could have included language in the policy providing for the 

outcome it advocates, there is no language providing anything other than that 

indemnity coverage is conditionally triggered in this case if there are sufficient 

damages.30 

Farm Family also cites Comerica Inc. v. Zuric American Insurance Co.31, 

Trinity Homes LLC v. Ohio Casualty Co.

32 , Kippers Co. v. Aetna Casualty & Surety 

Co.33, and Zeig v. Massachusetts Bonding & Insurance Co.

34

 The Court reviewed 

these cases and notes that each of them involve interpretations of polices that 

specifically require actual payment of a sum certain before coverage is triggered. In 

comparison, Farm Family’s duty to pay is premised upon payment of primary 

 

27 399 F. Supp.2d 655 (D. Md. 2005) aff’d in part rev’d in part 207 Fed. Appx. 305 (4th Cir. 2006).

28 See id. at 667 (recognizing that while it may be true as a general statement of common practice 

in the insurance industry that umbrella polices drop down to provide coverage, it is irrelevant in 

light of specific policy language that provides to the contrary). 

29 Id.

30 For instance, had the policy included in the definition of primary insurance a phrase such as, 

“and at limits no less than those required in the declaration page”, that revised definition would 

have engendered a different outcome. The Court is unable to read such a provision into the 

contract, however, and it must give full force and effect to all the policy’s provisions.

31 498 F. Supp. 2d 1019, 1032 (E.D. Mich. 2007).

32 629 F.3d 653 (7th Cir. 2010).

33 98 F.3d 1440 (3d Cir. 1996).

34 23 F.2d 665 (2nd Cir. 1928).
15

insurance that is “collectible.” These cases do not support the conclusion that given 

the language in this policy, actual payment of the coverage referenced in the 

declaration page is required to trigger coverage, provided damages are fixed at over 

$250,000.

In summary, the Court does not interpret the umbrella policy to require Farm 

Family to be liable for any part of the gap between policies. Mrs. Lankford may 

have been personally liable for the gap before the settlement, but there are no terms 

in the umbrella policy that require her to actually pay that gap before the umbrella 

policy triggers. Farm Family is forced to shoulder no additional risk other than what 

it bargained for and drafted into its policy. 

IV. Conclusion

For the reasons set forth above, the Court declares that, under the clear and 

unambiguous terms of the umbrella policy, Farm Family is obligated to pay damages 

to the injured parties in amount fixed by any verdict or settlement in an underlying 

tort action that exceed $250,000. At that point, Farm Family is obligated to provide 

coverage for the damages in that fixed amount, up and until the exhaustion of its one 

million dollars in available coverage.

IT IS SO ORDERED 

/s/Jeffrey J Clark

Judge