diff --git a/api/v1/merge_strategies.go b/api/v1/merge_strategies.go
index f169c5f73..779c9f157 100644
--- a/api/v1/merge_strategies.go
+++ b/api/v1/merge_strategies.go
@@ -69,13 +69,11 @@ func AtomicDefaultsMergeStrategy(source, target machinery.Policy) machinery.Poli
 		return source
 	}
 
-	mergeableTargetPolicy := target.(MergeablePolicy)
-
-	if !mergeableTargetPolicy.Empty() {
-		return mergeableTargetPolicy.DeepCopyObject().(machinery.Policy)
+	if mergeableTarget := target.(MergeablePolicy); !mergeableTarget.Empty() {
+		return copyMergeablePolicy(mergeableTarget)
 	}
 
-	return source.(MergeablePolicy).DeepCopyObject().(machinery.Policy)
+	return copyMergeablePolicy(source.(MergeablePolicy))
 }
 
 var _ machinery.MergeStrategy = AtomicDefaultsMergeStrategy
@@ -86,7 +84,7 @@ func AtomicOverridesMergeStrategy(source, _ machinery.Policy) machinery.Policy {
 	if source == nil {
 		return nil
 	}
-	return source.(MergeablePolicy).DeepCopyObject().(machinery.Policy)
+	return copyMergeablePolicy(source.(MergeablePolicy))
 }
 
 var _ machinery.MergeStrategy = AtomicOverridesMergeStrategy
@@ -105,12 +103,16 @@ func PolicyRuleDefaultsMergeStrategy(source, target machinery.Policy) machinery.
 	targetMergeablePolicy := target.(MergeablePolicy)
 
 	// copy rules from the target
-	rules := targetMergeablePolicy.Rules()
+	rules := lo.MapValues(targetMergeablePolicy.Rules(), mapRuleWithSourceFunc(target))
 
 	// add extra rules from the source
 	for ruleID, rule := range sourceMergeablePolicy.Rules() {
 		if _, ok := targetMergeablePolicy.Rules()[ruleID]; !ok {
-			rules[ruleID] = rule.WithSource(source.GetLocator())
+			origin := rule.GetSource()
+			if origin == "" {
+				origin = source.GetLocator()
+			}
+			rules[ruleID] = rule.WithSource(origin)
 		}
 	}
 
@@ -129,12 +131,16 @@ func PolicyRuleOverridesMergeStrategy(source, target machinery.Policy) machinery
 	targetMergeablePolicy := target.(MergeablePolicy)
 
 	// copy rules from the source
-	rules := sourceMergeablePolicy.Rules()
+	rules := lo.MapValues(sourceMergeablePolicy.Rules(), mapRuleWithSourceFunc(source))
 
 	// add extra rules from the target
 	for ruleID, rule := range targetMergeablePolicy.Rules() {
 		if _, ok := sourceMergeablePolicy.Rules()[ruleID]; !ok {
-			rules[ruleID] = rule
+			origin := rule.GetSource()
+			if origin == "" {
+				origin = target.GetLocator()
+			}
+			rules[ruleID] = rule.WithSource(origin)
 		}
 	}
 
@@ -206,3 +212,15 @@ func PathID(path []machinery.Targetable) string {
 		return strings.TrimPrefix(k8stypes.NamespacedName{Namespace: t.GetNamespace(), Name: t.GetName()}.String(), string(k8stypes.Separator))
 	}), "|")
 }
+
+func mapRuleWithSourceFunc(source machinery.Policy) func(MergeableRule, string) MergeableRule {
+	return func(rule MergeableRule, _ string) MergeableRule {
+		return rule.WithSource(source.GetLocator())
+	}
+}
+
+func copyMergeablePolicy(policy MergeablePolicy) MergeablePolicy {
+	dup := policy.DeepCopyObject().(MergeablePolicy)
+	dup.SetRules(lo.MapValues(dup.Rules(), mapRuleWithSourceFunc(policy)))
+	return dup
+}
diff --git a/api/v1beta3/authpolicy_types.go b/api/v1beta3/authpolicy_types.go
index 27aba8cf3..8aae9cda9 100644
--- a/api/v1beta3/authpolicy_types.go
+++ b/api/v1beta3/authpolicy_types.go
@@ -189,6 +189,11 @@ func (p *AuthPolicy) Rules() map[string]kuadrantv1.MergeableRule {
 }
 
 func (p *AuthPolicy) SetRules(rules map[string]kuadrantv1.MergeableRule) {
+	// clear all rules of the policy before setting new ones
+	p.Spec.Proper().NamedPatterns = nil
+	p.Spec.Proper().Conditions = nil
+	p.Spec.Proper().AuthScheme = nil
+
 	ensureNamedPatterns := func() {
 		if p.Spec.Proper().NamedPatterns == nil {
 			p.Spec.Proper().NamedPatterns = make(map[string]MergeablePatternExpressions)
diff --git a/api/v1beta3/ratelimitpolicy_types.go b/api/v1beta3/ratelimitpolicy_types.go
index 796f911c7..0d058291b 100644
--- a/api/v1beta3/ratelimitpolicy_types.go
+++ b/api/v1beta3/ratelimitpolicy_types.go
@@ -132,7 +132,10 @@ func (p *RateLimitPolicy) Rules() map[string]kuadrantv1.MergeableRule {
 }
 
 func (p *RateLimitPolicy) SetRules(rules map[string]kuadrantv1.MergeableRule) {
-	if len(rules) > 0 && p.Spec.Proper().Limits == nil {
+	// clear all rules of the policy before setting new ones
+	p.Spec.Proper().Limits = nil
+
+	if len(rules) > 0 {
 		p.Spec.Proper().Limits = make(map[string]Limit)
 	}