The trick I've learned is you need to offset the outside band's radius by your seam allowance. I'll use 1/2" to make it easy. So you have a 3" radius seam. The insert will be 1/2" larger. The band will also 1/2" larger. This means there's 1" total overlap (2 times the seam allowance) between the two pieces. I find it works well to use staples to hold everything together while you sew it, if you are having problems with it all lining up.

@Steven M I have issues with this also, can you post some pics sometime? I’m a visual learner and not sure I understand your explanation.

For stuff like this, I find it much faster to draw it in CAD and cut chipboard patterns on the laser. For this example the blue is the seam:


The red is the outer band and the green is the insert. With 1/2 seam allowance. So, there's 1" between the two:


The final patterns with seam allowance for each part:

Sample:

The chipboard patterns:

@Steven M thank you!

Thanks a lot Steven!! I really appreciate the pictures and the sample you made up, it really helps to clarify. I'll give this a shot tomorrow, makes a lot of sense, should solve my problem!