What Is DIC Insurance Coverage?

If you’re worried your traditional homeowners insurance doesn’t provide you enough coverage, difference in conditions (DIC) coverage can help. Difference in conditions coverage provides protection beyond what a typical homeowners insurance policy offers, including support for floods, earthquakes, landslides, and mudslides.

Companies often purchase DIC policies to fill gaps in coverage, but homeowners can buy this type of coverage, too.

Difference in conditions insurance: What to know

A DIC policy generally spells out what’s covered, what’s not covered, what the coverage limits are, and how much the coverage costs.

Traditional home insurers and specialty insurers sell DIC coverage. You can also shop for DIC coverage through an independent insurance agent or broker. DIC coverage may be sold as a separate policy or as an add-on (endorsement) to an existing policy.^[1]

A key advantage of DIC coverage is that it can apply to claims for incidents that a standard home insurance policy wouldn’t cover, such as a flood or earthquake. However, DIC coverage normally comes with separate coverage limits and a separate deductible. In addition, DIC coverage might bump up the overall cost of protecting your home and belongings.

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What does DIC insurance cover?

DIC insurance covers incidents that a standard homeowners insurance policy doesn’t. This coverage generally includes:

• Floods

• Earthquakes

• Landslides

• Mudslides

DIC coverage can be customized, though. For instance, you may be able to purchase either named-perils or all-perils coverage as well.

Named-perils coverage pays claims only for perils that are listed in the policy. All-perils coverage pays claims for any peril that isn’t listed in the policy. Named-perils coverage usually costs less than all-perils coverage.

You may consider DIC coverage if, for instance, you live in an area prone to both floods and mudslides or both earthquakes and landslides. With DIC coverage, you can tailor your policy to common perils in your region.

What does DIC insurance exclude?

DIC typically won’t cover perils already covered by a standard insurance policy. The following types of perils are covered by most standard insurance policies — and excluded from DIC insurance.

• Fire

• Smoke

• Lightning

• Windstorm

• Hailstorm

• Falling objects

• Weight of snow, ice, or sleet

• Theft

• Vandalism

• Damage caused by vehicles

• Damage caused by aircraft

Should you buy DIC insurance?

The decision to buy DIC insurance depends largely on which catastrophes are common where you live.

For example, if you live in the state of Washington, DIC coverage might be a good investment because landslides and mudslides are common and standard home insurance policies generally don’t cover these disasters.

And if you live in tornado-prone Oklahoma, you might consider skipping DIC coverage because a standard homeowners insurance policy generally covers tornado damage.^[2] But since Oklahoma isn’t known as a flood- or earthquake-prone state, DIC coverage might cost more money than it’s worth.

DIC coverage pros and cons

Like most financial or insurance products, DIC insurance has both advantages and disadvantages, including:

Difference in condition coverage and California FAIR Plan

Some California homeowners who obtain coverage through the California FAIR Plan may want to consider adding DIC coverage.

Labeled as a last-resort option, the California FAIR Plan makes insurance available to Californians who can’t buy traditional home insurance. However, a FAIR Plan provides only basic fire, smoke, lightning, and “internal explosion” coverage by default. Windstorm, hailstorm, and vandalism coverage are available through the FAIR Plan at an extra cost.

A FAIR Plan policy doesn’t cover things like theft, floods, earthquakes, water damage, and personal liability, though. Nonetheless, a FAIR Plan policy meets a mortgage lender’s requirements for home insurance.

Coupling a DIC policy with a FAIR Plan policy provides more comprehensive coverage than a FAIR Plan policy alone would, closely mirroring what a standard policy would cover. For example, if a California homeowner lives in a crime-prone area, a DIC policy could provide theft protection if a burglary occurs.

A FAIR Plan policy doesn’t cover earthquakes, but earthquake coverage is available as a separate policy. The same is true for floods. However, a California homeowner can buy flood coverage through the National Flood Insurance Program (NFIP) or from private insurers.

Keep Reading: How to Find Out if You Live in a Flood Zone

Which insurers sell DIC insurance?

You can buy DIC insurance directly from a variety of traditional and specialty insurers, as well as through independent insurance agents or brokers. Unlike flood insurance, federal programs don’t sell DIC insurance.

A number of well-known insurers sell DIC coverage in California, including:

• CSAA (affiliated with AAA)

• Farmers

• Foremost

• Nationwide

• State Farm

• Stillwater

• Travelers

You can contact your state’s department of insurance to learn more about DIC providers available to you.

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How much does DIC insurance cost?

The cost of DIC insurance depends on several factors, including where your home is and the materials used to build it. This means DIC coverage may be more expensive for you if your home is near a cliff where a landslide could occur, for example.

You can reduce the cost of your homeowners insurance, including DIC coverage, by following these six tips:

1. Shop online to compare insurance rates.

2. Obtain quotes from at least three insurers.

3. Buy home insurance and auto insurance from the same company to score a bundling discount.

4. Improve the disaster-readiness of your home by reinforcing your roof, windows, and other key areas.

5. Ask about discounts, such as those for installing home security equipment.

6. Raise your deductible. Increasing the deductible from $500 to $1,000 might reduce your premium.

Difference in conditions insurance FAQs