diff --git a/intelhex/__init__.py b/intelhex/__init__.py
index 155f17f..dde980a 100644
--- a/intelhex/__init__.py
+++ b/intelhex/__init__.py
@@ -67,13 +67,21 @@ class _DeprecatedParam(object):
 class IntelHex(object):
     ''' Intel HEX file reader. '''
 
-    def __init__(self, source=None):
+    def __init__(self, source=None, overlap='error'):
         ''' Constructor. If source specified, object will be initialized
         with the contents of source. Otherwise the object will be empty.
 
         @param  source      source for initialization
                             (file name of HEX file, file object, addr dict or
                              other IntelHex object)
+        @param  overlap     defines behavior for overlapping addresses
+                            during hex file loading:
+                            - 'error': raises AddressOverlapError (default)
+                            - 'ignore': keeps the original data, discards new data
+                            - 'replace': replaces the original data with new data
+
+                            Note: this parameter currently only affects loading
+                            from HEX files via loadhex or during initialization.
         '''
         # public members
         self.padding = 0x0FF
@@ -84,6 +92,11 @@ def __init__(self, source=None):
         self._buf = {}
         self._offset = 0
 
+        # overlap setting for hex loading
+        if overlap not in ('error', 'ignore', 'replace'):
+            raise ValueError("overlap argument should be either 'error', 'ignore' or 'replace'")
+        self._overlap_check = overlap
+
         if source is not None:
             if isinstance(source, StrType) or getattr(source, "read", None):
                 # load hex file
@@ -140,11 +153,17 @@ def _decode_record(self, s, line=0):
         if record_type == 0:
             # data record
             addr += self._offset
-            for i in range_g(4, 4+record_length):
-                if not self._buf.get(addr, None) is None:
-                    raise AddressOverlapError(address=addr, line=line)
-                self._buf[addr] = bin[i]
-                addr += 1   # FIXME: addr should be wrapped 
+            base_addr = addr  # Start address for this record's data
+            for i in range_g(record_length):
+                current_addr = base_addr + i
+                # Check for overlap based on self._overlap_check setting
+                if current_addr in self._buf:
+                    if self._overlap_check == 'error':
+                        raise AddressOverlapError(address=current_addr, line=line)
+                    elif self._overlap_check == 'ignore':
+                        continue # Skip assignment for this byte
+                # Assign if address doesn't exist OR if overlap is 'replace'
+                self._buf[current_addr] = bin[4+i]
                             # BUT after 02 record (at 64K boundary)
                             # and after 04 record (at 4G boundary)
 
@@ -184,8 +203,8 @@ def _decode_record(self, s, line=0):
                 raise DuplicateStartAddressRecordError(line=line)
             self.start_addr = {'EIP': (bin[4]*16777216 +
                                        bin[5]*65536 +
-                                       bin[6]*256 +
-                                       bin[7]),
+                                        bin[6]*256 +
+                                        bin[7]),
                               }
 
     def loadhex(self, fobj):
diff --git a/intelhex/test.py b/intelhex/test.py
index 2aff575..1b1278d 100755
--- a/intelhex/test.py
+++ b/intelhex/test.py
@@ -1576,6 +1576,36 @@ def test_eof(self):
         # EOF should raise special exception
         self.assertRaises(_EndOfFile, self.decode_record, ':00000001FF')
 
+    def test_overlap_options(self):
+        # Hex file with overlapping data
+        overlapping_hex = """\
+:020000001122CB
+:02000100334486
+:00000001FF
+"""
+        # Test 'error' (default)
+        ih_error = IntelHex()
+        ih_error._decode_record(':020000001122CB')  # First record ok
+        self.assertRaisesMsg(AddressOverlapError,
+                             'Hex file has data overlap at address 0x1 '
+                             'on line 1',
+                             ih_error._decode_record,
+                             ':02000100334486', 1)
+
+        # Test 'ignore'
+        ih_ignore = IntelHex(overlap='ignore')
+        ih_ignore.loadhex(StringIO(overlapping_hex))
+        self.assertEqual(ih_ignore[0], 0x11)
+        self.assertEqual(ih_ignore[1], 0x22) # Should keep the first value (0x22)
+        self.assertEqual(ih_ignore[2], 0x44)
+
+        # Test 'replace'
+        ih_replace = IntelHex(overlap='replace')
+        ih_replace.loadhex(StringIO(overlapping_hex))
+        self.assertEqual(ih_replace[0], 0x11)
+        self.assertEqual(ih_replace[1], 0x33) # Should be replaced with the second value (0x33)
+        self.assertEqual(ih_replace[2], 0x44)
+
 #/class TestDecodeHexRecords