A federal appeals court Thursday reinstated negligence claims against an Amwins Group Inc. unit in connection with property coverage it provided for a property management company.

Litigation in the case had been initiated by Berkshire Hathaway Inc. unit General Star Indemnity Co., which charged in a complaint filed in U.S. District Court in Atlanta in 2018 that Atlanta-based Triumph Housing Management LLC’s total insured values were underreported by nearly $30 million, according to the initial complaint in General Star Indemnity Co., Amwins Brokerage of Alabama, The Cone Co. v. Triumph Housing Management, LLC. 

General Star has since settled the litigation and was not a party to the ruling issued by the 11th U.S. Circuit Court of Appeals in Atlanta.

Amwins Brokerage and insurance agency Cone Co., based in Montgomery, Ala., were subsequently charged by Triumph with negligent procurement for obtaining a policy for scheduled coverage, where properties are individually listed on the policy, instead of the requested blanket coverage, which provides a total limit, and for failing to ensure that all structures were adequately covered.

The district court dismissed these charges and denied Triumph’s request to amend its complaint. The case was reinstated by a unanimous three-judge appeals court panel. An insured’s duty “to read his insurance policy and verify its terms does not require him to be clairvoyant,” the ruling said.

“Triumph alleges that it did not receive a copy of the General Star policy until after several claims had arisen under it,” the ruling said. The pivotal question “is whether the remaining facts alleged in Triumph’s third-party complaint support an inference that Triumph exercised ordinary diligence to find out the terms of the policy issued by General Star and verify that it provided the coverage that Triumph sought,” it said. 

This question, though, was not considered by the district court, the ruling said.

“Although the allegations provide sparse information relevant to whether Triumph exercised ordinary diligence in verifying that the General Star policy provided the coverage it requested, we cannot say that matter is so plain from the face of Triumph’s complaint that dismissal at the pleading stage was warranted — especially where … Triumph may have been able to allege additional supportive facts if it had been given an opportunity to amend its complaint,” the ruling said in reversing the district court’s dismissal of Triumph’s third-party negligent procurement claims and remanding the case for further proceedings.

Amwins and Triumph’s attorneys did not respond to requests for comment.