{"id":1141,"date":"2017-03-28T10:25:14","date_gmt":"2017-03-28T08:25:14","guid":{"rendered":"https:\/\/www.namfisa.com.na\/educates\/?p=1141"},"modified":"2025-07-19T15:22:54","modified_gmt":"2025-07-19T13:22:54","slug":"over-insurance-what-is-over-insurance","status":"publish","type":"post","link":"https:\/\/www.namfisa.com.na\/educates\/over-insurance-what-is-over-insurance\/","title":{"rendered":"Over-Insurance? What Is Over-Insurance?"},"content":{"rendered":"\t\t
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What is Insurance?<\/h3><\/span><\/div>
Insurance is an instrument used to indemnify the insured from a potential loss. When the actual loss does occur, insurance cover ensures that the insured is reinstated back to their original financial position prior to when the loss occurred.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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What is Over-Insurance?<\/h3><\/span><\/div>
Over-insurance can be described as having excess insurance coverage\/policies that covers the same risk or having insurance cover in excess (more than) of the value of the possible loss that the insured can experience. Over-insurance occurs when an individual or a business has insurance cover in excess of the value of the risk(s) covered\/insured.\n
\nIn simple terms, this means that an individual or a business has insurance cover which exceeds the actual value of the insured asset (for example:\n
\n(1) a property with a market value of N$ 2.5 million is insured under an insurance policy for N$ 4 million or (b) a vehicle with a market value of N$ 150,000.00 is insured for N$ 250,000.00) Most over-insurance cases are common in the short-term insurance market, however, over-insurance may also occur in the long-term insurance market, although, generally it is difficult to place a value on the life of a person. There are however, long-term insurance scientific underwriting principles used by long-term insurance companies to determine over-insurance for life cover and disability benefits.
Additionally, over-insurance can also occur if an individual or business has more than one short-term insurance policy covering the same risk.
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Steps to Prevent or Address Over-Insurance<\/h3><\/span><\/div>
Consumers need to be pro-active with their insurance and financial needs. It is your responsibility to ensure that your insurance policies are taken out for the correct value and that you do not have excessive policies.\n
\nYou can do so by visiting your insurance agent or broker at least once a year to re-asses your financial needs as well as the value of your properties to ensure that you have appropriate insurance policies\/covers proportional to the value of your asset(s).<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Summary<\/h3><\/span><\/div>
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Examples of Over-Insurance<\/h5><\/div>
While over-insurance is more common in short-term insurance, it can also occur in long-term insurance (e.g., life or disability cover). Long-term insurers apply scientific underwriting principles to assess the appropriate level of cover and avoid over-insurance.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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  • <\/span>A property with a market value of N$2.5 million insured for N$4 million<\/li>
  • <\/span>A vehicle worth N$150,000 insured for N$250,000<\/li>
  • <\/span>Having multiple short-term insurance policies covering the same risk<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    Why is Over-Insurance a Problem?<\/h5><\/div>
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    • <\/span>Moral Hazard: Over-insurance can tempt policyholders to profit from a loss, which may increase the risk of intentional or fraudulent claims.<\/li>
    • <\/span>Limits on Pay-outs: Insurers typically only pay out up to the actual value of the loss, regardless of how much cover you hold. If you have multiple policies on the same asset, only one policy may pay out.<\/li>
    • <\/span>Wasted Premiums: Paying for excess or duplicate coverage results in unnecessary financial strain\u2014money spent on excess premiums could otherwise have been saved or invested.<\/li>
    • <\/span>Lower Disposable Income: Excessive insurance premiums reduce your disposable income, limiting your ability to meet other financial obligations or build wealth.<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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      How to Prevent Over-Insurance<\/h5><\/div>
      To ensure that your insurance is adequate but not excessive, take the following steps:<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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      • <\/span>Review your policies annually with your broker or agent. Ensure your cover reflects the current market value of your assets.<\/li>
      • <\/span>Avoid duplicating cover on the same asset. Make sure you understand the scope of each policy to prevent overlapping risks.<\/li>
      • <\/span>Understand your financial needs and adjust your policies accordingly as your life or business situation changes.<\/li>
      • <\/span>Get professional advice to ensure your cover is proportional and aligned with your actual risk exposure.<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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        <\/h5><\/div>
        Over-insurance not only leads to wasted money but also creates ethical risks and financial inefficiencies. Responsible insurance management starts with awareness and proactive policy review. Ensure your insurance cover is suitable\u2014not too little, and not too much\u2014for peace of mind and financial security.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

        What is Insurance? Insurance is an instrument used to indemnify the insured from a potential loss. When the actual loss does occur, insurance cover ensures that the insured is reinstated<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_EventAllDay":false,"_EventTimezone":"","_EventStartDate":"","_EventEndDate":"","_EventStartDateUTC":"","_EventEndDateUTC":"","_EventShowMap":false,"_EventShowMapLink":false,"_EventURL":"","_EventCost":"","_EventCostDescription":"","_EventCurrencySymbol":"","_EventCurrencyCode":"","_EventCurrencyPosition":"","_EventDateTimeSeparator":"","_EventTimeRangeSeparator":"","_EventOrganizerID":[],"_EventVenueID":[],"_OrganizerEmail":"","_OrganizerPhone":"","_OrganizerWebsite":"","_VenueAddress":"","_VenueCity":"","_VenueCountry":"","_VenueProvince":"","_VenueState":"","_VenueZip":"","_VenuePhone":"","_VenueURL":"","_VenueStateProvince":"","_VenueLat":"","_VenueLng":"","_VenueShowMap":false,"_VenueShowMapLink":false,"footnotes":""},"categories":[428],"tags":[],"class_list":["post-1141","post","type-post","status-publish","format-standard","hentry","category-long-term-insuarence"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/comments?post=1141"}],"version-history":[{"count":8,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1141\/revisions"}],"predecessor-version":[{"id":35723,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1141\/revisions\/35723"}],"wp:attachment":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/media?parent=1141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/categories?post=1141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/tags?post=1141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}