A difference in conditions policy provides insurance coverage for certain types of damage or loss that aren't covered under your primary home or property insurance policy. In other words, a DIC policy fills in coverage gaps left by another policy to give you more adequate financial protection.
In natural disaster-prone areas with limited insurance options, homeowners often purchase their fire and wind insurance through a last-resort insurer (like a FAIR Plan) that doesn't come with coverage for liability, theft, or other types of loss. By combining a FAIR Plan or equivalent high-risk policy with DIC insurance, you're filling in those protection gaps and ensuring your insurance coverage replicates that of a standard home insurance policy.
DIC policies have become especially vital in California, where an uptick in home-threatening wildfires, state government regulations, and ongoing supply chain issues has forced many homeowners to buy coverage through the California FAIR Plan. Many of these Californians affected by the state's home insurance crisis are supplementing their FAIR plan policies with difference in conditions coverage as well.
Difference in conditions insurance provides coverages and policy enhancements that aren't included in a homeowner's primary insurance policy.
If you get property insurance via your state's FAIR (Fair Access to Insurance Requirements) Plan, you can combine it with a DIC policy to duplicate the coverage you'd get in an HO-3 or HO-5 home insurance policy.
It’s common for residents in high fire risk areas of California to get fire and windstorm coverage with a California FAIR Plan and pair it with DIC policy that covers water damage, theft, and liability.
What is difference in conditions (DIC) insurance?
A difference in conditions policy is a type of insurance that fills in the coverage gaps of an existing policy, like a state FAIR Plan or similar policy with more limited protection than standard home insurance.
When purchased alongside a FAIR Plan, a DIC policy may give you liability insurance, additional livings expenses protection, broaden what perils or disasters are covered, or fill in other coverage gaps left by the main policy.
DIC insurance for businesses vs. homes
A difference in conditions policy is traditionally purchased by multinational organizations and larger businesses to cover natural disasters that aren’t typically covered under their commercial property or flood insurance policies, such as sinkholes, mudflow, and landslides. It can also provide excess insurance to increase coverage amounts beyond the limits of a primary commercial flood or earthquake insurance policy.
With residential properties, you generally purchase difference in conditions insurance if your house is in a high-risk wildfire or hurricane area where standard home insurance isn't an option. In this case, you'd likely combine a FAIR or Beach Plan for fire and wind perils with a DIC policy, which would give you what essentially amounts to a standard home insurance policy.
What does a difference in conditions policy cover?
A difference in conditions policy essentially acts as a companion policy to a FAIR Plan policy with more limited protection. This helps property owners — particularly those in wildfire-prone areas of California — get the same property and liability coverages that you'd find in an HO-3 home insurance policy.
Here are the main coverage gaps a difference in conditions policy can help fill:
Theft: While some FAIR Plans at least offer optional protection for vandalism and malicious mischief, most don't offer coverage for theft of personal belongings. With DIC insurance, you'd be able to fill in this important coverage gap — and it may even offer additional coverage for theft of jewelry or other high-value items with lower per-item limits.
Water damage: FAIR Plans often cover or offer optional extended coverages for most property damage perils covered under home insurance, but they won't cover water damage from burst pipes or roof leaks under any circumstances. Most DIC home policies can provide coverage for non-weather related water damage in addition to theft losses.
Liability: FAIR Plans also don't include liability protection, so homeowners will need DIC insurance to protect their finances from expensive lawsuits.
You may also have the option to add coverage endorsement and loss settlement enhancements, such as equipment breakdown coverage, replacement cost contents, or extended dwelling protection.
DIC insurance & the CA FAIR Plan
Since many major insurance companies in California are no longer insuring houses in fire-prone areas of the state, residents have turned to the California FAIR Plan — a nonprofit insurance pool that provides last-resort home insurance.
Although the CA FAIR Plan is a fine last-resort option if you’re getting turned away by standard insurers, it doesn't offer the same coverage for liability, water damage, or theft like you'd find in a standard homeowners insurance policy.
To fill in those coverage gaps, most California residents pair their FAIR Plan with a difference in conditions policy.
DIC insurance companies
If you have a CA FAIR Plan but you’d like more protection, consider increasing your coverage with a DIC policy. There are several standard insurance companies that offer difference in conditions insurance in the state of California, including: 
Keep in mind that these DIC policies are only intended to complement FAIR Plans and will not provide coverage beyond that of a standard home insurance policy. If you’re interested in DIC insurance for catastrophe perils, you’ll likely need to get coverage with an excess and surplus insurance company.
Frequently asked questions
What does DIC stand for?
In property insurance, DIC stands for "difference in conditions." This is a policy type that's designed to fill in coverage gaps or expand coverage to losses or exposures that aren't covered under the main business or residential policy.
Do I need a difference in conditions policy in California?
If you have CA FAIR Plan insurance, you'll want to consider a DIC policy to ensure your home and assets are fully protected from water damage, theft, and potential liability incidents.