For attic insulation blown in insulation is preferred and No, you do not have to remove the insulation unless it is damaged and has lost it's insulating properties due to dampness etc.
If there isn't anything wrong with the old other than it has settled, you can blow more insulation right on top. If it is at least up to the level of the ceiling/attic floor joists, you can install rolled batts right over the old as well. You want to get the old out of there if it is wet or has animal droppings in it.
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Make sure you install the new correctly...don't block the eave ventilation.
Here is Olympia's post that Courtier referenced. Similar question and some good information in the responses (except that goofy Colorado guy with the chubby-cheeks baby, you can't trust him) - http://www.hometalk.com/activity/89763
Check out the U-Tube clips on this site before you start doing this. Pay attention to the air sealing part. No sense covering over air leaks that will only take away from the R value of the insulation.
Air sealing attic top plates and above steps and soffit is the one you need to see.
If there isn't anything wrong with the old other than it has settled, you can blow more insulation right on top. If it is at least up to the level of the ceiling/attic floor joists, you can install rolled batts right over the old as well. You want to get the old out of there if it is wet or has animal droppings in it. ...»
Make sure you install the new correctly...don't block the eave ventilation.
Take a look at Olympia's posting
Air sealing attic top plates and above steps and soffit is the one you need to see.