McGriff Insurance Services Inc. is not responsible for a hotel management company failing to purchase a builders risk policy for a warehouse later damaged in a flood that the broker did not know about, a federal appeals court ruled Wednesday, in affirming a lower court.

Little Rock, Arkansas-based I Square Management LLC helped create Arkansas Knoxville Hotel LLP to purchase a hotel in Knoxville, Tennessee, with plans for its significant renovation, according to the ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in I Square Management LLC; Arkansas Knoxville Hotel LP v. McGriff Insurance Services Inc.

Furniture, fixtures and equipment were purchased in bulk and stored in a warehouse, according to the ruling. At one point during the project, McGriff, a subsidiary of Trust Insurance Holdings Inc., advised the project’s general contractor that a builders risk policy was unnecessary for the construction.

After a flood damaged or destroyed property in the warehouse, I Square and AKH filed claims with their insurers, which were denied. They then sued McGriff, alleging it had negligently advised them that they did not need to purchase a builders risk policy for the project.

The U.S. District Court in Little Rock ruled in the broker’s favor and was affirmed by a three-judge appeals court panel.

The Arkansas Supreme Court has consistently ruled that it is an insured’s responsibility to educate himself about insurance coverage, the ruling said.

It has recognized, however, that an agent may have a duty to advise clients of appropriate coverage in some jurisdictions when there is a “special relationship” between the two.

That relationship did not exist here, the panel ruled. The plaintiffs “have failed to show the existence of a special relationship between McGriff and the insureds that gave rise to additional duties on the part of McGriff to ensure that they had adequate coverage,” it said.

“Any assumed duty to give proper advice would have been based on the knowledge that McGriff had about the project, and it does not appear that anyone at I Square or AKH had told McGriff about the warehouse or that McGriff otherwise knew about it such that it could ensure it was properly covered,” the ruling said, in affirming the lower court.

I Square Management attorney Scott Poynter, of the Poynter Law Group in Little Rock, said in a statement, “At present, we intend to petition for en banc review.” McGriff’s attorneys did not respond to a request for comment.