Definitions for "Overinsurance"
An excessive amount of insurance carried by an insured, which might create a temptation, to cause loss deliberately or to prolong disability or hospital stay. Insurance companies place provisions in some health policies to limit liability in situations of overinsurance.
An amount of insurance that is excessive in relation to the loss insured against.----------[ Back
The basic principle of indemnity means that no one should profit from a fortuitous loss. There is therefore no point in overinsurance - it is just a waste of premium. However, non-indemnity insurances such as Personal Accident benefits have to be watched closely by insurers to prevent fraudulent claims.