The insured engineering company had two different insurers over two policy periods. Both policies were “claims made and reported” policies. A fire occurred on a project in which the insured was involved. During the first policy period, the insured received correspondence warning of intention to commence a claim against it and inviting the engineering company’s insurer to participate in testing to investigate the cause of the fire. The insured responded that it could not be liable in light of the nature of its retainer but agreed to participate in testing. During the second policy period, a statement of claim was served upon the insured with no further notice. The second policy excluded coverage for claims which the insured had notice of before the commencement of the policy period. On the basis of the “prior notice” exclusion, the court held that the insured was not entitled to coverage under the second policy.
