Coverage Overlap with Multiple Policies

There are times in which an individual may have more than one homeowner's insurance policy. This may be done in an effort to receive the most on settlements, but what you may find is that the end result is not what you think it may be or what you want it to be.

Either you are going to find that the insurance companies will work well together or that it makes no difference that you have multiple policies that are overlapping. There may even be a debate regarding who pays first.

As for when overlap occurs, it occurs when the same type of coverage exists with two different insurers and they both cover the same loss.


If you experience policy overlap and an incident happens, then both may pay. Nevertheless, you are not going to receive a large amount of money over the damage amount. What you may get, however, is the entire amount covered when it may not be otherwise.

For instance, leaky pipes may have caused a flood in your home. The damage totals $10,000. However, the insurance adjuster that is sent by a single company estimates the damage at $8,000. Of course the insurance adjuster is going to go for the lowest amount of compensation possible. However, both insurance companies can pay the lowest amount possible between the two of them and yet you can receive complete compensation.

This can make paying the two premiums worth it for you. This is especially so if you have one policy that won't cover certain perils and another that will, such as an umbrella policy. Sometimes it depends upon the company. For instance, flood insurance may not be offered through one company, but it may be offered through the other. If you need flood insurance, then you will need that separate policy that does cover floods.

But just as there are benefits, there are disadvantages as well. You should know both so that you can evaluate whether the extra money being paid on premiums is worth it.

Disadvantages of Overlap

The main disadvantage of overlapping policies is the fact that you are paying out more money to make it happen. And despite the fact you are paying out more money, you may not get the help that you expect. For instance, the two insurance companies may talk amongst themselves about who is going to pay first and who is going to pay last. This could take a while.

If one insurance company pays first, then the second may not pay much at all. You may or may not get the amount of money that is needed. One may not pay at all, so this is something to consider. You may also wish to talk with both insurance companies on how they will work with one another in such cases.

Then there is the fact that the insurance company that may pay may be the one that was in force when an accident happened and not when the claim took place. If you have occurrence insurance, then that is what will happen. If you have claims insurance on the other, that means it will pay when the claim is made.

So as you can see, there are advantages and disadvantages of coverage overlap, which means decisions to be made. You may find that having one insurer is the best route and then you can just add umbrellas to cover items that are not covered under your policy or those items with limits. Although the cost may be a little more, you may still save money as opposed to having two policies overlap.



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