In this paper, the effects of interpolation methodology on the accuracy of computed solutions are discussed in the context of unstructured overset grids. An in-house implementation of the overset method for OpenFOAM, OPERA (Chandar, 2015; Chandar et al., 2015) has been used. Several verification and validation studies reported previously used a simple interpolation technique such as inverse distance weighting and this was found to be adequate for prediction of forces. For closed problems however, the force history is plagued with unphysical oscillations. Also, a quantitative assessment of interpolation errors is lacking. The current work aims to understand the effects of interpolation error on conservation and how this error can be minimized by enforcing flux correction and/or better interpolation techniques. Apart from enforcing conservation, the pressure equation needs to be adjusted as well in an implicit manner to guarantee the transfer of fluxes correctly between overlapping regions. Importance of conservation and higher order interpolation are also discussed in the context of multiphase flows.