It is preserved if in a child theme which is what is needed. Nothign in a child theme is overwritten.

One of the problems with WordPress updates is that do a complete removal of any files in the target folders and replace them lock, stock and barrel. Hence WordPress ‘child’ themes and now SP child themes which are outside of any updates.

There is now a Reboot Child theme framework available on our download pages which I recommend you use and place your custom overlay into that.

Yellow Swordfish said
It is preserved if in a child theme which is what is needed. Nothign in a child theme is overwritten.
One of the problems with WordPress updates is that do a complete removal of any files in the target folders and replace them lock, stock and barrel. Hence WordPress ‘child’ themes and now SP child themes which are outside of any updates.
There is now a Reboot Child theme framework available on our download pages which I recommend you use and place your custom overlay into that.

Ahhh didn’t think the overlay needed a child, though now it makes sense why.  I’ll look into the framework.  Creating the child has been an issue for me.  Could not get it to work properly.  

The framework helps. If not there, create the overlay folder in the same place as the parent, copy your custom overlay onto that and just make sure t has a unique name. We actually use a custom overlay and child theme on reboot here in this site so it does work!

The ‘official’ codex article on doing this should be up in the next few days as well.