What Is Difference in Conditions (DIC) Coverage?
- Difference in Conditions (DIC) Insurance: DIC coverage fills the gaps left by the California FAIR Plan, providing more complete protection.
- While the FAIR Plan covers risks like fire and smoke, a DIC policy adds coverage for perils such as liability, water damage, and other common risks tpyically included in standard homeowners insurance.
By pairing the California FAIR Plan with a DIC policy, you can safeguard your property against a wider array of risks and enjoy peace of mind.
Homeowners insurance typically covers risks like fire, wind, and theft. However, if you’ve struggled to find coverage due to brush risk or have been non-renewed because of it, you may need to explore alternative insurance solutions. One of those options is a Difference in Conditions (DIC) policy, also known as a “Wrap.” This approach combines two policies to offer more comprehensive protection, similar to a standard homeowners policy.
In this post, we’ll cover:
What is the California FAIR Plan?
The California FAIR Plan was established in 1968 to provide insurance for homeowners who can’t obtain coverage through traditional insurers. It’s designed for high-risk properties, such as homes in wildfire zones, coastal areas, or properties with multiple prior claims.
With the increasing threat of wildfires and a growing number of non-renewals, more Californians are turning to the FAIR Plan for home protection.
FAIR Plan policies are “named peril” policies, which means they only cover specific events listed in the policy. Core coverages include:
Fire
Lightning
Internal explosion
Smoke
Vandalism or malicious mischief (optional)
Extended coverages: windstorms or hail, explosion, riot, aircraft or vehicle damage (optional)
While the California FAIR Plan offers basic protection, it leaves out crucial coverages like water damage, theft, and liability. That’s where a DIC policy comes in. A DIC policy, offered by standard insurers, supplements the FAIR Plan by filling these coverage gaps. Together, these policies provide a more complete insurance solution, similar to a typical homeowners policy.
It’s important to maintain both policies because the DIC policy excludes risks already covered by the FAIR Plan. If you have both policies, you may also qualify for discounts by bundling your auto and umbrella insurance with the same DIC carrier.
DIC policies can serve as either primary or excess coverage, depending on the cause of loss. For example:
If the damage is due to fire, the FAIR Plan policy will handle the claim.
If there’s a liability claim, the DIC policy will take over.
Remember, a DIC policy can only be purchased if you already have a California FAIR Plan policy.
While the California FAIR Plan covers fire and smoke, it leaves out other common risks. Key coverages offered by a DIC policy include:
Falling objects
Water damage
Weight of ice, snow, or sleet
Freezing
Theft (depending on occupancy)
Liability
Medical payments
However, exclusions such as wear and tear, earthquakes, and floods still apply to both the FAIR Plan and DIC policies. If you need earthquake or flood coverage, separate policies are required.
The California FAIR Plan has coverage limits. It can provide up to $3 million total coverage, including dwelling, personal property, other structures, and fair rental value. If your home’s value exceeds this limit, you may need to explore non-admitted or surplus lines insurance for more adequate protection.
If you live in a high-risk, fire-prone area and must rely on the California FAIR Plan for coverage, adding a DIC policy is essential for more complete protection. By combining both policies, you can fill coverage gaps and ensure your home is adequately protected from all potential risks.