In an insurance coverage action for breach of contract the Superior Court of the state of Delaware found that two exclusions commonly used by carriers to get out of covering regulatory investigations don’t apply when the government is investigating the insured under the False Claims Act. The case is Guaranteed Rate v. Ace Am. Ins. Co., 2022 Del. Super. LEXIS 367 (Super. Ct. Aug. 24, 2022).

Guaranteed Rate, Inc. (GRI), an underwriter and issuer of federally-insured mortgage loans, sought $18 million from insurer ACE in connection with the settlement of a government investigation. The U.S. Department of Justice and the U.S. Attorney’s Office for the Northern District of New York investigated alleged violations of the False Claims Act, and on June 27, 2019, GRI received a Civil Investigation Demand (CID). The parties filed cross-motions for summary judgment. GRI subsequently filed a motion for judicial notice of two False Claims Act cases, which GRI believes to have similarities relevant to their arguments against ACE.