diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index ed05cf0a52e..da22fecfb8d 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -11977,7 +11977,7 @@ namespace ts {
                         matchingCount = Infinity;
                     }
                     else if (overlap.flags & TypeFlags.Union) {
-                        // Some subset overlap if we have only string literals.
+                        // We only want to account for literal types otherwise.
                         // If we have a union of index types, it seems likely that we
                         // needed to elaborate between two generic mapped types anyway.
                         const len = length(filter((overlap as UnionType).types, isUnitType));
@@ -11986,7 +11986,7 @@ namespace ts {
                             matchingCount = len;
                         }
                     }
-                    else if (!(overlap.flags & TypeFlags.Never) && 1 >= matchingCount) {
+                    else if (isUnitType(overlap) && 1 >= matchingCount) {
                         bestMatch = target;
                         matchingCount = 1;
                     }
diff --git a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.errors.txt b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.errors.txt
index 3944c430f33..1b8dab19b5b 100644
--- a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.errors.txt
+++ b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.errors.txt
@@ -8,9 +8,17 @@ tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(19,3): error TS2345
       Type 'string' is not assignable to type 'number'.
 tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(24,5): error TS2345: Argument of type '{ a: string; b: string; }' is not assignable to parameter of type 'Bar | Other'.
   Object literal may only specify known properties, and 'a' does not exist in type 'Bar | Other'.
+tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(42,10): error TS2345: Argument of type '{ dog: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+  Property 'cat' is missing in type '{ dog: string; }' but required in type 'CatDog'.
+tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(43,10): error TS2345: Argument of type '{ man: string; bear: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+  Property 'pig' is missing in type '{ man: string; bear: string; }' but required in type 'ManBearPig'.
+tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(46,26): error TS2345: Argument of type '{ man: string; beer: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+  Object literal may only specify known properties, and 'beer' does not exist in type 'ExoticAnimal'.
+tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(47,10): error TS2345: Argument of type '{ man: string; beer: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+  Type '{ man: string; beer: string; }' is missing the following properties from type 'ManBearPig': bear, pig
 
 
-==== tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts (3 errors) ====
+==== tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts (7 errors) ====
     interface Foo {
         a: string;
         b: number;
@@ -53,4 +61,35 @@ tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts(24,5): error TS2345
     
     h(x);
     h({ a: '', b: '' })
-    
\ No newline at end of file
+    
+    interface CatDog { cat: any, dog: any }
+    interface ManBearPig { man: any, bear: any, pig: any }
+    interface Platypus { platypus: any }
+    
+    type ExoticAnimal =
+        | CatDog
+        | ManBearPig
+        | Platypus;
+    
+    declare function addToZoo(animal: ExoticAnimal): void;
+    
+    addToZoo({ dog: "Barky McBarkface" });
+             ~~~~~~~~~~~~~~~~~~~~~~~~~~~
+!!! error TS2345: Argument of type '{ dog: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+!!! error TS2345:   Property 'cat' is missing in type '{ dog: string; }' but required in type 'CatDog'.
+!!! related TS2728 tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts:31:20: 'cat' is declared here.
+    addToZoo({ man: "Manny", bear: "Coffee" });
+             ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+!!! error TS2345: Argument of type '{ man: string; bear: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+!!! error TS2345:   Property 'pig' is missing in type '{ man: string; bear: string; }' but required in type 'ManBearPig'.
+!!! related TS2728 tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts:32:45: 'pig' is declared here.
+    
+    const manBeer = { man: "Manny", beer: "Coffee" };
+    addToZoo({ man: "Manny", beer: "Coffee" });
+                             ~~~~~~~~~~~~~~
+!!! error TS2345: Argument of type '{ man: string; beer: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+!!! error TS2345:   Object literal may only specify known properties, and 'beer' does not exist in type 'ExoticAnimal'.
+    addToZoo(manBeer);
+             ~~~~~~~
+!!! error TS2345: Argument of type '{ man: string; beer: string; }' is not assignable to parameter of type 'ExoticAnimal'.
+!!! error TS2345:   Type '{ man: string; beer: string; }' is missing the following properties from type 'ManBearPig': bear, pig
\ No newline at end of file
diff --git a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.js b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.js
index 36824508b12..a5d63d76f21 100644
--- a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.js
+++ b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.js
@@ -28,7 +28,24 @@ declare function h(x: Foo | Bar | Other): any;
 
 h(x);
 h({ a: '', b: '' })
-
+
+interface CatDog { cat: any, dog: any }
+interface ManBearPig { man: any, bear: any, pig: any }
+interface Platypus { platypus: any }
+
+type ExoticAnimal =
+    | CatDog
+    | ManBearPig
+    | Platypus;
+
+declare function addToZoo(animal: ExoticAnimal): void;
+
+addToZoo({ dog: "Barky McBarkface" });
+addToZoo({ man: "Manny", bear: "Coffee" });
+
+const manBeer = { man: "Manny", beer: "Coffee" };
+addToZoo({ man: "Manny", beer: "Coffee" });
+addToZoo(manBeer);
 
 //// [errorsOnUnionsOfOverlappingObjects01.js]
 "use strict";
@@ -41,3 +58,8 @@ g(exports.x);
 g({ a: '', b: '' });
 h(exports.x);
 h({ a: '', b: '' });
+addToZoo({ dog: "Barky McBarkface" });
+addToZoo({ man: "Manny", bear: "Coffee" });
+var manBeer = { man: "Manny", beer: "Coffee" };
+addToZoo({ man: "Manny", beer: "Coffee" });
+addToZoo(manBeer);
diff --git a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.symbols b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.symbols
index 0ce5d6fd2d4..b92f2e895f6 100644
--- a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.symbols
+++ b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.symbols
@@ -75,3 +75,58 @@ h({ a: '', b: '' })
 >a : Symbol(a, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 28, 3))
 >b : Symbol(b, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 28, 10))
 
+interface CatDog { cat: any, dog: any }
+>CatDog : Symbol(CatDog, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 28, 19))
+>cat : Symbol(CatDog.cat, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 30, 18))
+>dog : Symbol(CatDog.dog, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 30, 28))
+
+interface ManBearPig { man: any, bear: any, pig: any }
+>ManBearPig : Symbol(ManBearPig, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 30, 39))
+>man : Symbol(ManBearPig.man, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 31, 22))
+>bear : Symbol(ManBearPig.bear, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 31, 32))
+>pig : Symbol(ManBearPig.pig, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 31, 43))
+
+interface Platypus { platypus: any }
+>Platypus : Symbol(Platypus, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 31, 54))
+>platypus : Symbol(Platypus.platypus, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 32, 20))
+
+type ExoticAnimal =
+>ExoticAnimal : Symbol(ExoticAnimal, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 32, 36))
+
+    | CatDog
+>CatDog : Symbol(CatDog, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 28, 19))
+
+    | ManBearPig
+>ManBearPig : Symbol(ManBearPig, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 30, 39))
+
+    | Platypus;
+>Platypus : Symbol(Platypus, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 31, 54))
+
+declare function addToZoo(animal: ExoticAnimal): void;
+>addToZoo : Symbol(addToZoo, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 37, 15))
+>animal : Symbol(animal, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 39, 26))
+>ExoticAnimal : Symbol(ExoticAnimal, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 32, 36))
+
+addToZoo({ dog: "Barky McBarkface" });
+>addToZoo : Symbol(addToZoo, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 37, 15))
+>dog : Symbol(dog, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 41, 10))
+
+addToZoo({ man: "Manny", bear: "Coffee" });
+>addToZoo : Symbol(addToZoo, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 37, 15))
+>man : Symbol(man, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 42, 10))
+>bear : Symbol(bear, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 42, 24))
+
+const manBeer = { man: "Manny", beer: "Coffee" };
+>manBeer : Symbol(manBeer, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 44, 5))
+>man : Symbol(man, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 44, 17))
+>beer : Symbol(beer, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 44, 31))
+
+addToZoo({ man: "Manny", beer: "Coffee" });
+>addToZoo : Symbol(addToZoo, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 37, 15))
+>man : Symbol(man, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 45, 10))
+>beer : Symbol(beer, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 45, 24))
+
+addToZoo(manBeer);
+>addToZoo : Symbol(addToZoo, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 37, 15))
+>manBeer : Symbol(manBeer, Decl(errorsOnUnionsOfOverlappingObjects01.ts, 44, 5))
+
diff --git a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.types b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.types
index a860897d1fa..1e9b1b8c5ef 100644
--- a/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.types
+++ b/tests/baselines/reference/errorsOnUnionsOfOverlappingObjects01.types
@@ -80,3 +80,64 @@ h({ a: '', b: '' })
 >b : string
 >'' : ""
 
+interface CatDog { cat: any, dog: any }
+>cat : any
+>dog : any
+
+interface ManBearPig { man: any, bear: any, pig: any }
+>man : any
+>bear : any
+>pig : any
+
+interface Platypus { platypus: any }
+>platypus : any
+
+type ExoticAnimal =
+>ExoticAnimal : ExoticAnimal
+
+    | CatDog
+    | ManBearPig
+    | Platypus;
+
+declare function addToZoo(animal: ExoticAnimal): void;
+>addToZoo : (animal: ExoticAnimal) => void
+>animal : ExoticAnimal
+
+addToZoo({ dog: "Barky McBarkface" });
+>addToZoo({ dog: "Barky McBarkface" }) : void
+>addToZoo : (animal: ExoticAnimal) => void
+>{ dog: "Barky McBarkface" } : { dog: string; }
+>dog : string
+>"Barky McBarkface" : "Barky McBarkface"
+
+addToZoo({ man: "Manny", bear: "Coffee" });
+>addToZoo({ man: "Manny", bear: "Coffee" }) : void
+>addToZoo : (animal: ExoticAnimal) => void
+>{ man: "Manny", bear: "Coffee" } : { man: string; bear: string; }
+>man : string
+>"Manny" : "Manny"
+>bear : string
+>"Coffee" : "Coffee"
+
+const manBeer = { man: "Manny", beer: "Coffee" };
+>manBeer : { man: string; beer: string; }
+>{ man: "Manny", beer: "Coffee" } : { man: string; beer: string; }
+>man : string
+>"Manny" : "Manny"
+>beer : string
+>"Coffee" : "Coffee"
+
+addToZoo({ man: "Manny", beer: "Coffee" });
+>addToZoo({ man: "Manny", beer: "Coffee" }) : void
+>addToZoo : (animal: ExoticAnimal) => void
+>{ man: "Manny", beer: "Coffee" } : { man: string; beer: string; }
+>man : string
+>"Manny" : "Manny"
+>beer : string
+>"Coffee" : "Coffee"
+
+addToZoo(manBeer);
+>addToZoo(manBeer) : void
+>addToZoo : (animal: ExoticAnimal) => void
+>manBeer : { man: string; beer: string; }
+
diff --git a/tests/baselines/reference/unionTypeWithRecursiveSubtypeReduction2.errors.txt b/tests/baselines/reference/unionTypeWithRecursiveSubtypeReduction2.errors.txt
index a849878087f..1bd7a693966 100644
--- a/tests/baselines/reference/unionTypeWithRecursiveSubtypeReduction2.errors.txt
+++ b/tests/baselines/reference/unionTypeWithRecursiveSubtypeReduction2.errors.txt
@@ -5,7 +5,11 @@ tests/cases/compiler/unionTypeWithRecursiveSubtypeReduction2.ts(19,1): error TS2
 tests/cases/compiler/unionTypeWithRecursiveSubtypeReduction2.ts(20,1): error TS2322: Type 'Class' is not assignable to type 'Property'.
   Types of property 'parent' are incompatible.
     Type 'Namespace' is not assignable to type 'Module | Class'.
-      Property 'parent' is missing in type 'Namespace' but required in type 'Class'.
+      Type 'Namespace' is not assignable to type 'Module'.
+        Types of property 'members' are incompatible.
+          Type '(Class | Property)[]' is not assignable to type 'Class[]'.
+            Type 'Class | Property' is not assignable to type 'Class'.
+              Type 'Property' is not assignable to type 'Class'.
 
 
 ==== tests/cases/compiler/unionTypeWithRecursiveSubtypeReduction2.ts (2 errors) ====
@@ -39,6 +43,9 @@ tests/cases/compiler/unionTypeWithRecursiveSubtypeReduction2.ts(20,1): error TS2
 !!! error TS2322: Type 'Class' is not assignable to type 'Property'.
 !!! error TS2322:   Types of property 'parent' are incompatible.
 !!! error TS2322:     Type 'Namespace' is not assignable to type 'Module | Class'.
-!!! error TS2322:       Property 'parent' is missing in type 'Namespace' but required in type 'Class'.
-!!! related TS2728 tests/cases/compiler/unionTypeWithRecursiveSubtypeReduction2.ts:10:12: 'parent' is declared here.
+!!! error TS2322:       Type 'Namespace' is not assignable to type 'Module'.
+!!! error TS2322:         Types of property 'members' are incompatible.
+!!! error TS2322:           Type '(Class | Property)[]' is not assignable to type 'Class[]'.
+!!! error TS2322:             Type 'Class | Property' is not assignable to type 'Class'.
+!!! error TS2322:               Type 'Property' is not assignable to type 'Class'.
     
\ No newline at end of file
diff --git a/tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts b/tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts
index aec1821c162..fe1d63cb606 100644
--- a/tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts
+++ b/tests/cases/compiler/errorsOnUnionsOfOverlappingObjects01.ts
@@ -27,3 +27,21 @@ declare function h(x: Foo | Bar | Other): any;
 
 h(x);
 h({ a: '', b: '' })
+
+interface CatDog { cat: any, dog: any }
+interface ManBearPig { man: any, bear: any, pig: any }
+interface Platypus { platypus: any }
+
+type ExoticAnimal =
+    | CatDog
+    | ManBearPig
+    | Platypus;
+
+declare function addToZoo(animal: ExoticAnimal): void;
+
+addToZoo({ dog: "Barky McBarkface" });
+addToZoo({ man: "Manny", bear: "Coffee" });
+
+const manBeer = { man: "Manny", beer: "Coffee" };
+addToZoo({ man: "Manny", beer: "Coffee" });
+addToZoo(manBeer);
\ No newline at end of file