What Is it Called When You Own Overlapping Insurance?

The phrase "overlapping insurance" is how insurance companies refer to a situation where the insured person has coverage for a procedure from two different companies. Overlapping coverage is the official terminology, and may be referred to as dual or redundant coverage. And while it may be a good idea to have more than one insurance policy, multiple policies that overlap can create problems or even result in a claim being denied.

When Dual Coverage Works

• Dual coverage can be helpful as long as the two policies do not provide coverage for the same things. One example of this would be a health insurance policy that does not include certain procedures, or will only pay a limited portion of the costs. Another example would be coverage that will pay for surgery but does not include the supplies and medications required after the operation. Be sure that the dual coverage offers you more complete coverage but does not create a true overlap

Avoid Redundant Claims

• When two policies overlap, choose one for use in the claim rather than attempting to submit a claim to both companies. Redundant claims can result in both insurance companies denying the coverage on the grounds that the other company is obligated to pay. If this happens, it must be determined which company holds primary responsibility. According to a Supreme Court ruling, 851 F.2d 98, the company which holds a primary interest is obligated to pay for the costs and is not entitled to any reimbursement from the secondary policy. For this reason, insurance companies are reluctant to accept the designation as the primary insurer.

Overlapping Coverage Costly

• Paying for two insurance policies that cover the same practices and procedures is costly. Claims are not shared costs between the companies involved, so for every claim filed against one policy, your are paying premiums on a second policy that serves no purpose. A more affordable plan is to compare the policies and keep the one which offers the most complete coverage. For the second policy, trim the coverage and related premiums down to covering only items not included in the primary insurance or drop the second policy completely.

Medicare Overlap

• Medicare is one instance where overlapping coverages are allowed. If you belong to an employer sponsored health plan, that plan is primary one if the employer has more than 20 employees. Medicare will cover any remaining expenses or balances on the claim, acting as the secondary insurer. In this case, the coverages overlap, but they are applied in such a way that each insurer only pays for a portion of the bill as determined in the written policy of the primary insurer.

Auto Insurance Exclusions

• Overlapping car insurance policies can result in a claim being denied completely. Many car insurance policies contain clauses that make them exempt from claims that are payable with other insurance. This creates a situation where both policies cancel out and leave the policyholder with paying for the costs out of pocket.