In the recent case of Callahan v. Fortegra Insurance Company,¹ a New Hampshire Superior Court granted summary judgment to an excess insurer, holding that a policy requiring the underlying limit be "paid as damages by You or on Your behalf" is not satisfied by a claimant's offer to credit that limit against a default judgment. 

Background
An excess insurer issued a Hired and Non-Owned Auto (HNO) Liability Policy to a medical transportation company. HNO coverage protects a business against liability arising from vehicles it uses but does not own, such as rented vehicles or employees' personal vehicles driven on company business. The policy here stated that the insurance it provides "is Excess Coverage Only," applying to damages because of bodily injury or property damage caused by an accident arising from the ownership, maintenance, or use of a covered automobile. Critically, the policy provided that the insurer is not responsible for any sum incurred by the insured until an amount equal to the $300,000 combined single limit (CSL) is "paid as damages by You or on Your behalf."

The plaintiff was injured in August 2021 while being transported to a medical appointment by one of the insured's employees. She sued the insured in Massachusetts. The insured was served but never appeared, a default was entered, and following a damages hearing the court assessed $375,000. The judgment was then registered in New Hampshire at $497,082.38 with interest. The $300,000 CSL was never paid by an underlying insurer or anyone else on the insured's behalf.

The plaintiff then brought a declaratory judgment action against the insurer in New Hampshire seeking to collect the portion of her judgment exceeding $300,000. She argued the limit should be treated as "constructively exhausted:" the insurer should receive a $300,000 credit and pay the rest, plus interest. She relied principally on Bean v. Amica Mutual Insurance Co., a 2018 Rockingham County, New Hampshire Superior Court decision.²

The Decision
The insurer cross-moved for summary judgment, arguing that a credit is not the contractual equivalent of actual payment and that imposing liability would eliminate an express condition governing when the excess coverage attaches.

The Court (Ogden, J.) denied the plaintiff's motion and granted our cross-motion. It held that the policy provision "identifies both the threshold amount required and the event necessary to trigger" the insurer's obligation, and that while crediting the $300,000 "would recognize the threshold requirement, it would not satisfy the separate and distinct requirement that the threshold amount actually be paid." The Court found that reading the actual-payment language as satisfied "whenever a claimant agrees to deduct the underlying limit would replace the stated attachment event with a materially different one."

The Court distinguished Bean, which involved underinsured-motorist coverage governed by a statutory framework, and in which the insureds had settled with the tortfeasor's insurer before crediting their own carrier. Here, by contrast, the policy is a commercial excess liability policy, and the damages award "followed an uncontested default proceeding." The Court concluded that "[r]eplacing an actual payment event with a deemed credit would eliminate, rather than interpret, an express condition of the policy," and that it "cannot create an ambiguity merely to construe the policy against the insurer." 

Why It Matters
This decision is significant because there have been few decisions addressing whether a default judgment against an insured exceeding the CSL amount, by itself, triggers excess HNO coverage. HNO policies make up a sizable portion of many insurer's auto book of business, yet this policy language has not been extensively litigated. While this is a trial-level ruling and other courts may view the issue differently, it provides useful guidance in applying the policy, particularly where the insured defaults and no one pays the underlying limit.

Lessons Learned

• Enforce policy language as written. Attachment provisions that specify both a threshold amount and a triggering event (actual payment) should be enforced as written. Insurers should review whether their excess and HNO forms clearly state that the underlying limit must actually be paid, not merely credited.
• Consider context. Constructive-exhaustion arguments drawn from underinsured-motorist cases may not translate to commercial excess policies, which are not governed by the same statutory framework. Carriers should be prepared to distinguish such authority on that basis.
• Watch for insured defaults. Where an insured fails to appear and a default judgment exceeds the underlying limit, claimants may look directly to the excess carrier. Early identification of these situations allows insurers to evaluate coverage positions (or choose assign defense counsel to control the defense) before a declaratory judgment action is filed.

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^{1 218-2025-CV-00720 (N.H. Super. Ct., Rockingham County Oct 19, 2026)}

^{2 No. 218-2017-CV- 645, Order on the Parties’ Cross-Motions for Summary Judgment at 7–10 (N.H. Super. Ct., Rockingham County June 29, 2018) In Bean, the insureds agreed to give their underinsured-motorist carrier a credit for the entire tortfeasor policy limit, and the court concluded that strict enforcement of the exhaustion clause would not advance the statutory objectives governing underinsured-motorist coverage.}