Ülekindlustuslik

Ülekindlustuslik is an Estonian adjective that translates to "overinsured" or "excessively insured." It describes a situation where an individual or entity possesses insurance coverage that exceeds the actual value or insurable interest of the asset or risk being insured.

This can occur when multiple insurance policies are taken out for the same item, or when the sum insured is deliberately set higher than the asset's market value. For instance, insuring a car for more than its current worth would be considered ülekindlustuslik.

While it might seem like a way to gain a financial advantage, overinsurance often presents complications. Insurance policies typically stipulate that the payout cannot exceed the actual loss or the insured value, whichever is lower. In cases of overinsurance, the insurer will only compensate for the actual loss incurred, not the inflated sum insured. This means the policyholder pays higher premiums than necessary without receiving a proportional increase in potential payout. Furthermore, some insurance contracts may be invalidated or subject to adjustments if overinsurance is detected. The primary purpose of insurance is to protect against genuine financial loss, and overinsurance deviates from this principle.