Definitely not, stickwiththetruth, there is no penalty in being over insured
Well there is actually... there are at least two ways that you can get burnt:
1. The aircraft can be replaced with one of market value, thus you never get the "extra" $$ that it was insured for and you end up with something not as good as what you had.
2. If the damage is incurred by a third party, the third party insurance company may refuse to pay the full amount that you are insured for, because you were over insured... and why should they pay higher than market value?
On the flip side, if you're under insured and a third party writes off your plane, your insurance company can request market value for your aircraft which is a win for you. That being said, it sounds good, but rarely does it happen because usually it's the pilot of your aircraft that damages it.