There was some kind of negotiated agreement thrown together as part of the service area adjustments, which involved overlapping coverage. The problem was that the state did not want to pay for two fire departments arriving to fight a single fire. I think it was that either department can put out the fire, but not both. I suppose that would create a situation where they both race to the scene of the fire, but I haven't seen any of that. You might want to check on what overlapping coverage in your area really means.
I don't think so. In the People's Republic of Santa Cruz County, Cal Fire acts as the county fire department for the unincorporated areas only during the winter. The division is financial not service oriented. The problem is that areas that contribute the most tax revenue to the fire district, also seem to get second class service because of their remoteness. That's part of what inspired the Bonny Doon volunteer fire department to go independent. It would have been successful, expect that it was foiled by a politicized judge and local politics:
Dive in a little deeper into fire department politics and it will get far more weird.
My fire insurance has some requirement that I be near a hydrant or have some amount of water storage. I have what one might call a hydrant within 30ft, so I'm "safe". We used to share a 6,000(?) gallon redwood water tank on the hill above my house, but it burned down around 1980 and was not replaced.