Cross-lease unit insurance - any recent experiences?

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Wheelbarrow01

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#324576 29-Apr-2026 23:37

Random question of the day - curious if anyone on here has experienced a similar situation recently...

Back story is that I own a flat in a block of 6. It's a cross-lease title, meaning we each own our own individual flat, and the 6 unit owners collectively own and share the building envelope and the land it sits on. We all currently have our own individual insurance policies for each unit.

One of the other unit owners has emailed us all this evening to advise that his insurer has decided that they no longer wish to insure his unit individually - they will only continue his insurance if all 6 unit owners sign up to his insurer under a new group policy. That unit owner's broker has "kindly" offered to setup a Teams meeting to discuss the situation with us all and gain collective agreement to move to a single group policy.

So far, around half the owners have responded saying "yes, great idea", however I am not one of them. Call me cynical, but the way I see it is that this particular insurer has chosen to vary their terms (which they are perfectly entitled to do if they wish), but now they appear to be strong-arming all unit owners to try and gain 5 new customers rather than lose one, and using that owner's broker to do it.

My unit is insured, I am happy with the terms, and don't see the need for me to change just because it suits someone else. Moving to a group policy means a loss of control, reduction in flexibility, and once done it may be impossible (or at least very hard) for an individual owner to back out of. Once locked in, the incumbent insurer is then presumably free to dictate terms to all unit owners and charge whatever they like.

Cross-leases are not unit titles, we do not have a body corporate and therefore there is no mandate to share insurance - particularly as we don't share any other expenses (with the exception of building maintenance which has been handled successfully by handshake agreement without issue for the past 25 years of my ownership).

With things the way they are now, I decide how much to insure my unit for, I decide what the excess is, I get the benefit of my long no claim bonus and I ultimately decide who gets my business, and at what price. A group policy means I am at the mercy of others and I don't like that prospect. If that is what I wanted, I would have bought into a body corporate.

I understand there are certain advantages for the insurer in having a group arrangement, particularly when it comes to whole-of-building damage etc, however we got through the 2010/2011 earthquakes with 6 separate insurers just fine.

AITA?

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#3485674 30-Apr-2026 00:19

I’d listen and then decline if it was in anyway not what I wanted. If an individual insurer doesn’t want to cover someone else then they should explore other options.

Wheelbarrow01

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#3485675 30-Apr-2026 00:59

Handle9:

I’d listen and then decline if it was in anyway not what I wanted. If an individual insurer doesn’t want to cover someone else then they should explore other options.

Yes that is my position also. My draft response states "I am happy to jump on a call and/or view the proposal from your broker to see what they are offering, but it is by no means a done deal for me. I would only consider a change if the terms and pricing are acceptable to me and my circumstances".

I think that's fair. I also think they need to do their own legwork looking for alternatives. I was able to feed my unit address into 3 different insurer websites and get quotes from all of them with no issue - one was even a subsidiary of the insurer who is now allegedly saying no to individual policies...

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#3485676 30-Apr-2026 01:07

I’d also be really straightforward about you being hesitant about being bound into a group scheme. It’s a reasonable position and hard to argue against if you’re up front about it

wellygary

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#3485677 30-Apr-2026 05:57

Make sure there is a recording of this meeting, and make it clear that to every one that it is being recorded… I suspect there will be “varying” recollections of this as times goes on….

johno1234

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#3485686 30-Apr-2026 07:09

As long a there’s no unreasonable pressure to sign up there’s no harm in attending the meeting then weighing the proposal on its merits. Perhaps there will be a discount for the group membership. On the other hand you could be disadvantaged by someone’s poor insurance history or in the worst case have your cover invalidated by someone else’s actions.
Short answer: you are currently insured regardless of the others so not essential to change.

geek3001

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#3485693 30-Apr-2026 07:48

I am aware, second-hand (it didn't affect me), of this happening several years ago when one unit in a cross lease was sold.

Just prior to settlement, the purchaser's insurance company contacted the other unit owners and said that they needed to change their insurance to that of the purchaser, or do whatever was necessary to ensure all units and external common land were all covered by the same insurer.

All unit owners came to an arrangement to move to a single insurance provider, with each unit having their own insurance policy under that insurer.

You may need to consider getting some legal advice from your solicitor to determine what the facts are, rather than be pushed into something that is not legally required.

EDIT: This was in the late 2010's, ie: well after your earthquake experience in the early 2010's. Also, one of the unit owners found out during the process I described above, that they may not have been fully covered for external property damage should a claim have been made, as the units were insured with different insurers. None of the unit owners were aware of any of this until the change of ownership of one of them happened.

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MikeAqua

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#3485704 30-Apr-2026 08:47

If I was in your situation, I consider that poor behaviour from your neighbour's insurer and not engage.

Two comments:

If you're all in a joint insurance policy and one unit owner doesn't make their premium payments, is insurance of the whole complex at risk?
I'd talk to a bunch of brokers and see where you can all collectively get the best deal, not just consider one person's broker because it's convenient for them.

I suggest that you should weigh any possible saving of a group insurance policy, and the benefits of all owners having insurance cover, against entanglement with other people. There is a risk that one of them does something that invalidates the insurance policy or personally becomes uninsurable.

Also, if you have your home, contents and car with the same insurer, you may lose discount if you move the home insurance to someone else - would you be compensated for that?

Mike

Eva888

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#3485707 30-Apr-2026 09:01

I wouldn’t touch it either. So many variables. The devious in me wonders why his insurance was cancelled. Criminal activity and not disclosing it; too many claims; he’s got a new job at an insurance company and wants to bring in business; he’s maybe lying about the real reason and told them to get lost in a claim argument and they cancelled? The possibilities are many.

If other insurance companies are accepting quotes from you to insure, then he may have been put in the position of having to answer the usual question of 'have you ever been refused insurance' and is then refused by other companies he applies to. It smells.

You are right in not wanting to be tarred by the collective behaviour which could affect ability to sell in future should a potentially buyer for a variety of reasons be a person the insurance company refuses to accept.

You may have an excellent no claims record and afford a higher excess that lowers your premiums considerably. You are in control now, why give it up to be at the mercy of others behaviour.

Do attend the meeting and bring up the negatives regardless of your stand. Other owners may be naive to these.

MikeB4

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#3485716 30-Apr-2026 09:27

I suggest you talk to the Insurance Ombudsman's office or the Commerce Commission regarding this tactic. It sounds a lot like inertia selling which I feel is not legal.

Here is a crazy notion, lets give peace a chance.

alasta

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#3485743 30-Apr-2026 10:55

MikeAqua:

There is a risk that one of them does something that invalidates the insurance policy or personally becomes uninsurable.

This is probably the most important thing to consider. I live in a large townhouse complex with freehold titles and we have decided on balance that our best option is for the residents' association to instruct a broker to insure all home on a block-by-block basis, but this approach has pros and cons.

The main things to consider based on my experience:

If one unit is a rental then it is likely that the entire block will be insured as if all units are rented out. This imposes additional cost on owner-occupiers.
Naive owners may do things like renting out their unit on short term rental web sites like AirBnB without considering the insurance implications.

A lot of it comes down to how much you trust your neighbours. If you know them well and they are responsible then a collective arrangement can benefit everyone, but otherwise it can have major pitfalls.

If you do go ahead with a collective arrangement then make sure there is a neutral procurement process set out in advance. i.e. approaching multiple brokers or insurers to assess the market rather than just going with one owner's 'recommendation'.

CokemonZ

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#3485744 30-Apr-2026 10:55

Went through this a few years ago, due to a similar situation when one unit got sold.

We didn't go with the initial provider who started the issue, but checked a few of them, and there was a discount in all of us being with the same one.

We all ended up with our own policies, with the same company. Honestly was more like a bulk buy than anything - 6 policies all together.

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esawers

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#3485761 30-Apr-2026 12:41

I owned a unit in a block of 10, also cross lease, that was damaged beyond repair in the earthquakes.

The experience to get the building written off took 8 years, each individual owner had a different insurance company and was paid out separately.

We couldn't agree on reinstatement, some owners needed out due to marriage difficulties, some of the payments were paid to mortgage providers and those people didn't have the capability of getting new lending.

It ended with one owner taking the others to the high court with a forced sale of the whole building to an as-is buyer.

I believe this is one of the reasons multi unit dwellings now need one insurer, you will likely have the same problem when you go to sell, and the new owners can't get insurance.

k1w1k1d

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#3485768 30-Apr-2026 13:07

Contact your lawyer and insurance company before the meeting.

Go to the meeting.

Advise all residents to contact their lawyers and insurance companies before doing anything.

MikeAqua

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#3485773 30-Apr-2026 13:20

alasta:

Naive owners may do things like renting out their unit on short term rental web sites like AirBnB without considering the insurance implications.
A lot of it comes down to how much you trust your neighbours. If you know them well and they are responsible then a collective arrangement can benefit everyone, but otherwise it can have major pitfalls.

We had this exact scenario in our apartment building. New insurers said no short-term letting and that was the end of AirBnB. This annoyed a number of owners and some renters who were letting via Airbnb and simialr. But it allowed us to get the building insured.

You know your neighbours when you sign up to a collective policy, but you never know who they'll sell to and whether the insurer will be prepared to insure the new people. In some apartment buildings you have to be approved by a committee to buy or rent in the building. When we were apartment shopping in Welly a couple of places stipulated that on the TradeMe listing. They were all out of our price range, so maybe we were just the sort of riff raff they were trying to keep out.

Mike

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#3485776 30-Apr-2026 13:28

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

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