Difference in Conditions (DIC) Insurance
Difference in conditions (DIC) insurance fills the catastrophe gaps a standard property policy leaves out, most often earthquake and flood in California. It also turns a bare California FAIR Plan fire policy into more complete protection by adding coverages such as liability, theft, and water damage. What it includes may vary by policy.
What a DIC policy is for
A difference-in-conditions policy fills the gaps a standard property policy leaves behind. In California that usually means the big excluded catastrophe perils, earthquake and flood, and it is also the policy that turns a bare-bones California FAIR Plan fire policy into more complete protection.
What does DIC insurance cover?
- Earthquake, when it is not covered on your primary policy.
- Flood, as an alternative or supplement to the National Flood Insurance Program.
- Other excluded perils depending on the form, for example certain water damage, mudflow, or landslide, subject to terms.
- For FAIR Plan policyholders: the coverages the FAIR Plan does not include, such as liability, theft, and water damage.
Who needs a DIC policy?
Three groups, mainly. Homeowners whose only fire option is the California FAIR Plan and who need the rest of a homeowners policy’s protection. Owners who want earthquake or flood coverage structured through a DIC form. And commercial and habitational property owners closing catastrophe gaps.
A note on our role
The California FAIR Plan Association is an association of California-licensed property insurers, not a state agency, and Schneiderman Insurance Agency is not affiliated with or appointed by it. When we help you obtain a FAIR Plan policy, we act as your insurance broker and represent you, not the FAIR Plan. California’s defining property risks, wildfire, earthquake, and flood, are exactly the perils standard policies limit or exclude, which is why DIC is such a common tool here.
What exactly does the FAIR Plan leave out?
This is the question a DIC policy exists to answer, and the gap is wider than most policyholders realise. A California FAIR Plan policy covers fire, smoke, and a short list of other named perils. It does not include personal liability, theft, or water damage from burst pipes or appliances. Loss of use it handles differently rather than not at all: the FAIR Plan form provides Fair Rental Value, measured as what the dwelling could be rented for rather than reimbursing what you actually spend, and commonly capped at a percentage of the dwelling limit.
A household carrying only a FAIR Plan policy has fire coverage and very little else. The DIC is what restores the rest.
The liability gap is the one that catches people
Because the FAIR Plan carries no personal liability, a homeowner moved onto it loses the coverage that responds when a guest is injured or a dog bites someone. It also removes the foundation a personal umbrella sits on. An umbrella attaches above underlying home liability, so where that liability now comes from the DIC rather than the FAIR Plan, the umbrella carrier needs to see it.
How does DIC handle earthquake and flood?
These are the two catastrophe perils standard California policies exclude, and a DIC form can carry either or both.
For earthquake, a DIC is an alternative to a standalone policy from the California Earthquake Authority or a private carrier. That matters more since CEA reduced its personal property limit to a maximum of $25,000 and withdrew its breakables endorsement, because a DIC form may treat contents differently.
For flood, a DIC can sit as an alternative or a supplement to the National Flood Insurance Program, and private forms sometimes offer higher limits than the federal program allows.
What has to be in place first?
A DIC is written to sit against a primary policy, so the primary comes first and its wording decides what the DIC needs to do. Two policies, two carriers, two claims processes, and two deductibles.
DIC forms are frequently written in the surplus lines market, which means the terms are less standardised than an admitted policy and vary more between carriers. Reading the two forms alongside each other is the only way to see whether the seam between them is closed.
What a DIC does not reach
It is not a substitute for a primary policy and will not stand alone. It generally follows the exclusions of the form it is written on rather than covering everything the primary omits, so wear and tear, maintenance and the usual property exclusions stay excluded. Limits and sublimits are set on the DIC itself and do not automatically match the primary.
FAIR Plan coverage terms and CEA limits change from year to year. Current details are published by the California FAIR Plan Association and the Department of Insurance.
How we help
We help you assess your property’s catastrophe exposure, explain how a DIC form pairs with your primary policy or a California FAIR Plan fire policy, and coordinate the pieces so the coverages line up without gaps.
A DIC responds to what the underlying policy excludes, so its value depends entirely on the wording of the primary coverage you already hold.
