Cross-lease unit insurance - any recent experiences?

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ANglEAUT

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#3485961 30-Apr-2026 20:51

Nobody so far has mentioned that you reread your cross-lease agreement. What does the agreement state about insurance? IMO, that agreement comes before an outside insurance company "imposes their will" on the block of 6 flats.

Take that agreement to a lawyer and get both a modern interpretation and what was implied / assumed at the time of writing the document.

FYI My cross-lease agreement is older than me & has zero amendments. YMMV

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Wheelbarrow01

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#3485967 30-Apr-2026 22:33

Just to clarify, the other owner has not instantly lost his insurance because he did something wrong - his insurer has simply told him that when his current policy expires later this year, they will not renew it due to his unit being located in a "stacked" building - attached units next to and on top of each other. They will only do so on the basis that they get to insure the entire building.

Since his initial email yesterday, a second owner in the block has come forward to say that his own insurer (a different brand but under the same parent company as the other guy's insurer) has now also stated that they also will not renew his cover, and that his cover expires at the end of this week. This seems extraordinarily short notice for a change in underwriting policy. This well and truly raises some red flags for me, especially given the following paragraph.

The interesting thing is that the second owner has the same insurer as me. I called that insurer today to ask if they intend to decline my renewal later this year on the basis of a change to their underwriting policy/criteria. The agent said no, they are not changing their underwriting criteria for multi cross-lease units. This makes me think that the second unit owner's insurance issues are directly related to something they have done, or failed to do, such as non-disclosure.

I also spoke to a friend of a friend who works at a brokerage. She confirmed that yes - some insurers are choosing not to insure "stacked" units however the key words there are "some" and "choosing". She said there are still insurers who will gladly underwrite policies for individual units in cross-lease blocks, and while those insures may impose special terms, it is unlikely all insurers would close themselves off to this big of a market segment entirely. She also said cross-lease owners cannot be compelled to enter into a group policy against their will - and if the acid is being applied by their current insurer, the owner should vote with their feet.

I have advised the other owners in the block that I am happy to attend a meeting, listen to the broker's proposal and review the terms, but have let them know in no uncertain terms that if it doesn't suit me I won't be switching.

I've deliberately not named the insurers involved as I haven't yet spoken to them directly (except my own) and I want to hear exactly what they have to say before taking what I have been told second-hand as gospel. I'll update the thread when there are any developments.

geek3001

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#3486060 1-May-2026 09:55

Just speculating...

I wonder if instances of insurers not wanting to insure cross lease properties may be related to the construction methods.

If a cross lease has two or more separate houses / home units on the shared land, then there may be no issue.

If a cross lease group of home units are all built together with reasonably fireproof shared walls made of solid brick or concrete, then there may be no issue.

If a cross lease group of home units are all built together with barely fireproof walls of timber framing and gib lined construction, then there could be issues.

There has been media coverage in recent years of a so-called ticking time bomb with older home units that are approaching or have exceeded someone's perceived service life, that were built in the 1970's or earlier using then-current building methods that might cause insurers to think twice about insuring those properties.

With increasing insurance costs, perhaps some insurers are looking for an excuse to walk away from insuring some properties. That would be a bad thing as that leaves the owners in a bind when they go looking elsewhere for insurance and are required to disclose the fact that they have been refused insurance by another insurer.

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#3486069 1-May-2026 10:17

mortonman:

also bear in mind the excess is usually higher (to keep the cost down) and an individuals no claims history will be lost.

Not in my experience.

While the one insurer is insuring the whole building we have our own policies and own excesses (I choose to have a higher one than some of the others).

Someone alluded to an 8 year battle over larger claim earlier in the thread. IMO that seems to be the larger issue here.

May be different for apartment blocks, but for a fairly simple cross lease we weren't signing up as a big group, a bunch of individuals with the same company.

YMMV but it may not be the disaster it initially seems.

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#3487188 4-May-2026 00:16

I would suggest not going into this too fixed in your position because there is a good chance yours will go the same way and then you will have to work with your neighbours.

I have recently shopped around on my commercial insurance and found switching could be worse. It will certainly be more expensive.

Also I would not read anything into the other unit's situation. All sorts of things happen with insurance policies.

By way of example my recent renewal included a bunch of added conditions related to running a restaurant. I am in the tech business so said conditions have nothing to do with me. I am having a meeting with them later today to hopefully sort it out.

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#3513302 22-Jul-2026 09:01

Having just come across this thread, I am curious.

What was the conclusion and how did the meeting with the broker go?

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#3513383 22-Jul-2026 13:28

And who is the insurer? Guessing AIG group.

Wheelbarrow01

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#3513520 22-Jul-2026 23:31

I'll attempt to answer as briefly as possible, starting with a recap with some newly available detail.

The situation was brought about by one of the other owners in the block trying to change from a landlord type policy to an owner occupied policy. This triggered a new underwriting process and during that procedure, additional questions about the architecture/layout of the building were asked - questions that were apparently not asked prior to the commencement of their landlord policy. With additional building details/facts in their possession, the insurer AA decided they no longer wanted to provide coverage to that unit owner. In addition to this, they advised the existing landlord policy would end with 7 days notice. That unit owner frantically tried to get insurance elsewhere and hit the same wall with a number of insurers. Then time ran out and their existing policy was cancelled.

It also emerged that earlier this year, another unit owner was refinancing his unit and his bank required a new insurance certificate. This triggered a review by his insurer Vero, and a similar thing happened - Vero informed that owner that when his annual renewal comes up early in 2027, they would not be reinsuring him, based on a change in their underwriting rules for "stacked" units.

These events are what triggered a formal meeting between all the unit owners and an independent broker.

In a previous post, I stated that I had contacted my insurer AA asking if they intended to honour my renewal this coming September (knowing they had already cancelled my neighbour's cover). I stated that AA had told me (verbally) they are not changing their underwriting criteria for multi cross-lease units. However I subsequently received a letter from AA advising that they had investigated further after my call, and found that the units are "stacked". Given my policy had been in place for 8 years, the letter advised that they were happy to continue my insurance as an underwriting exception. However the letter went on to state: "It’s important to note that this underwriting exception may be reviewed at renewal due on 13/09/2026. At that time, we’ll reassess the policy and confirm whether cover can continue beyond that date". This new information materially changed my position somewhat....

At the owners meeting with the broker, it was agreed that having one unit currently uninsured represented a real risk to all owners. It also became clear that our sums insured were vastly different - for example while my premium was relatively low, I had the highest sum insured with more than $100k difference between mine and the lowest (for essentially an identical unit). We all agreed to the broker obtaining quotes from a number of insurers for a group policy - with no obligation on us to accept any of them.

In the end, the broker came back and presented a number of proposals, with the most attractive being AIG. Being a commercial policy, the inclusions are more comprehensive than any of our individual consumer policies, including generous allowances for common areas. We now have a realistic and agreed sum insured for the entire building. It also comes with $2m public liability cover and $1m statutory liability cover. There are also the usual benefits for tenanted units for loss of rent/meth contamination etc, and overall the whole building premium was cheaper for everyone - myself included. I'm saving about $400 a year even though my sum insured has risen slightly. One owner that owns 2 units in the block is saving over $2000 a year (it seems Vero were bending him over lol)

We have since put the AIG cover in place and everyone is happy. We all have an understanding that if any one of us wants to sell, their agent must make any prospective purchasers aware that there is a group insurance policy in place, but we all also understand that we have all entered into the policy voluntarily and we are free to leave the arrangement at any time, acknowledging that to do so would affect everyone. Realistically this is of little consequence because as time goes on, it seems likely that individual policies will just no longer be possible in stacked blocks of units such as ours.

While it is a single group policy, we are all individually named on it, so that anything one party does (or fails to do) should not negatively affect the others in any material way.

In summary, while I was skeptical about the situation at first, the broker actually did an excellent job of facilitating an open discussion amongst the owners, answering questions, addressing concerns and chasing the best possible deal in terms of pricing and cover. Looking at the big picture, there is definitely comfort in knowing we are now all insured and nobody is at risk due to one party having no (or insufficient) cover.

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#3513527 23-Jul-2026 00:37

Seems like you all made lemonade out of lemons. Well done!

MikeAqua

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#3513552 23-Jul-2026 08:44

Wheelbarrow01:

One owner that owns 2 units in the block is saving over $2000 a year (it seems Vero were bending him over lol)

Vero's head office in Auckland is a building with a giant toilet seat on the top of it. That's because they are a'holes.

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#3513564 23-Jul-2026 09:51

Good to hear that you had engaged a competent broker that had all your interests at heart to find the best possible result for everyone. Even managed to get better cover at a reduced price for you, so onto a winner.

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#3513644 23-Jul-2026 15:39

Sounds like a great conclusion to what initially sounded like a terrible situation for some, made worse by making enquiries!

It does raise the question - if a claim had been made while the original cover was in place, despite it being against their policy preferences and not yet having been granted exception status, would the claim have been accepted?
I guess we'll never know.

Great summary and pleased you got the right outcome.

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#3514145 25-Jul-2026 00:15

Handsomedan:

It does raise the question - if a claim had been made while the original cover was in place, despite it being against their policy preferences and not yet having been granted exception status, would the claim have been accepted?
I guess we'll never know.

I guess it would come down to quality of the questions that were asked at the time the policy was applied for (and how the applicant interpreted those questions when answering). In the case of AA insurance, it appears they now ask more detailed questions regarding the construction/layout of the building than they used to, and they present example diagrams online to help you choose. I do know that my original application was made over the phone rather than online - this is due to the property being in Christchurch, so there was some hoop jumping to provide all the earthquake repair information. In other words, I provided a lot more information than was standard back then (which included detailed photos of the building and repairs), so my defence would likely have been that if they didn't ask all the right questions, or didn't correctly assess all the information I provided, then that's on them. But had it been a simple online application, answering basic standard questions, then I am not so sure.

From the information I have since gathered, it seems that building design now matters a lot. Some blocks of units are fine so long as you only share walls with up to 2 adjoining units eg one on the left, one on the right. But if you also have a neighbour below or above you, you can expect getting individual cover to be difficult/impossible - but only if that extra information is asked for and/or disclosed.

But even then things can be misinterpreted by either party. In my case, I have neighbours to the left and right. Below my unit is my own garage and a garage belonging to another unit. the garages are not habitable spaces and AA specifically states that non-habitable spaces on the ground floor used for parking should not be counted. But in the case of my building, AA now does not adhere to their own published guidelines anymore because they DO now count the neighbour's garage as a habitable space in my case - but not in the case of my parents-in-law who recently took out a new policy with AA in almost the exact same circumstances (upstairs unit, adjoining 2 other units, with shared carports on the ground level underneath them). Knowing my situation, they triple checked with AA and the policy was still approved. Go figure...

Even today, some online quote systems do not ask all the right questions to confirm the layout of the building, meaning some people could be at risk. For example, AMI's online quote system allowed me to get to payment stage without asking any questions about how many units are in the block, how many neighbours I share walls with, or how they are laid out. When asked what type of dwelling it is, I selected "townhouse, duplex or terrace" from their dropdown list. They define that option as "self-contained homes that share a wall (or walls) with another home". I note the word home in the definition is singular, but some people possibly wouldn't notice that, and the definition doesn't specifically state that sharing walls with other homes is not part of their definition.

Under AMI's definitions, my dwelling in its block of 6 is probably an "apartment" ("a self-contained home in a building with other homes in it"), however because my dwelling has its own stairs and there is no single shared entrance door, I do not consider it to be an apartment, so I'd likely just have proceeded with a new townhouse/duplex/terrace policy as their definition for those most closely describes by dwelling.

And that's how easy it is to potentially take out a policy online that could possibly be avoided by the insurer later... because had I selected "apartment", the online process stops and I am asked to call to continue the application over the phone...

It's a bit of a minefield for sure.

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