What Does Overlapping Insurance Mean?
Overlapping insurance is when a party has multiple insurance policies with the same coverage for the same risk. This can happen when different types of insurance, such as property, liability, and other policies, cover the same peril. In such circumstances, the "other insurance clause" comes into play. This clause dictates which policy would cover the loss.
Insuranceopedia Explains Overlapping Insurance
Overlapping insurance can benefit both the insurer and the policyholder. The reason is because if a claim is filed for a peril covered by multiple policies, one insurer may not have to pay the full amount. It could be split between the different insurers, or it could even be the full responsibility of one insurer. The policyholder benefits because they have multiple sources of insurance coverage for a peril. This could be especially helpful if one insurer suddenly goes bankrupt, for instance.