What does Overinsurance mean? Read on to discover the definition & meaning of the term Overinsurance - to help you better understand the language used in insurance policies.
Situation where an insured has bought so much coverage that it exceeds the actual cash value (or the replacement cost) of the risk or property insured. For the insurance company overinsurance constitutes a moral hazard because the insured (overinsured) may be tempted to make a false claim to profit from a loss.
We hope the you have a better understanding of the meaning of Overinsurance.