20+ years in insurance and personal finance content creation
Contributor to top brands like USA Today
John specializes in insurance, personal finance, real estate, and health and wellness. In 2022, he authored a guide on content marketing for beginners.
5+ years in insurance and personal finance content
Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.
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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 explained
DIC policies can help protect homeowners — especially those in areas with a high risk for natural disasters — against perils like earthquakes, floods, and mudslides. Standard home insurance policies don’t usually cover damages from these perils.
Business and commercial property owners commonly use DIC insurance to fill coverage gaps in their master insurance policies.[1]
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.
But DIC coverage normally comes with separate coverage limits and a separate deductible.[2] In addition, DIC coverage might bump up the overall cost of protecting your home and belongings.
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What DIC insurance covers
DIC insurance covers incidents that a standard homeowners insurance policy doesn’t. This coverage generally includes:
Floods
Earthquakes
Landslides
Mudslides
You can typically customize your DIC coverage. For example, 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.
Good to Know
With DIC coverage, you can tailor your policy to common perils in your region. You may consider DIC coverage if you live in an area prone to both floods and mudslides or both earthquakes and landslides.
What DIC insurance doesn’t cover
DIC insurance typically doesn’t cover perils that a standard home insurance policy covers. Most standard home insurance policies cover the following types of perils, so a DIC insurance policy wouldn’t cover them:
Fire
Smoke
Lightning
Windstorm
Hailstorm
Falling objects
Weight of snow, ice, or sleet
Theft
Vandalism
Damage caused by vehicles
Damage caused by aircraft
Who needs 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. But since Oklahoma isn’t known as a flood- or earthquake-prone state, DIC coverage might cost more money than it’s worth.
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 tips:
Improve the disaster-readiness of your home by reinforcing your roof, windows, and other key areas.
Ask about discounts, such as those for installing home security equipment.
Raise your deductible. Increasing the deductible from $500 to $1,000 might reduce your premium.
DIC insurance pros and cons
Like most financial or insurance products, DIC insurance has both advantages and disadvantages, including:
Pros
Fills in coverage gaps: DIC policies cover incidents that standard home insurance policies typically don’t cover.
Customizable coverage: You can customize your policy to include either named perils or excluded perils.
Widely available: You can buy a DIC policy through many insurance companies, brokers, and independent insurance agents.
Cons
Separate deductibles: Your DIC policy will probably come with separate coverage limits and deductibles from those included in your standard home insurance policy.
May not be worth the expense: If you don’t live in an area at risk for natural disasters, you likely don’t need this additional coverage.
Where to get 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, 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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DIC insurance 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.[3] But 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. But a California homeowner can buy flood coverage through the National Flood Insurance Program (NFIP) or from private insurers.
Difference in conditions insurance FAQs
DIC insurance features various wrinkles that you need to know about, and you can find additional information about this type of insurance below.
What’s the difference between HO-3 and DIC policies?
An HO-3, or special form, policy is the most common type of standard home insurance policy. It’s an open-peril policy that covers the structure of your home, your personal belongings, liability if someone is injured on your property, and additional living expenses if you have to move out of your home temporarily while repairs are being made.
DIC policies fill in gaps to cover things that HO-3 policies don’t, such as earthquakes, floods, and mudslides. They typically have separate deductibles and higher coverage limits than standard home insurance policies.
Does a DIC policy have a deductible?
A DIC policy does come with a deductible. So, if you have a $1,000 deductible, the insurer would subtract that amount from a claim payout. A DIC deductible might be higher than the deductible for a standard homeowners insurance policy.
What perils do DIC policies cover?
A DIC policy covers a range of perils, such as floods, earthquakes, landslides, and mudslides. Standard homeowners insurance normally doesn’t include the disasters that a DIC policy covers. A DIC policy can cover perils that are listed in the policy or exclude perils that aren’t listed in the policy.
What is a DIC endorsement?
A DIC endorsement adds coverage to an existing policy. In the case of homeowners insurance, a DIC endorsement would cover perils beyond what a standard policy would cover. This added coverage might increase the overall cost of your homeowners insurance.
John Egan is a freelance writer and content marketing strategist in Austin, Texas. His specialties include personal finance, real estate, and health and wellness. John’s work has been published by outlets such as CreditCard.com, Bankrate, Forbes Advisor, Experian, Capital One, The Balance and U.S. News & World Report. He is the author of The Stripped-Down Guide to Content Marketing.
5+ years in insurance and personal finance content
Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.
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