DIC Insurance: How a Difference in Conditions Policy Completes Your FAIR Plan

A difference in conditions (DIC) policy is a second home insurance policy that covers what a California FAIR Plan policy leaves out, chiefly personal liability, theft, water damage, and fuller loss of use than the FAIR Plan's capped Fair Rental Value. Private insurers sell it as a companion to the FAIR Plan's bare fire policy, and the two contracts together come close to standard homeowners coverage.^[4]

The FAIR Plan does not sell a DIC itself. Its own website says DIC policies exist to fill its coverage gaps and sends you to a broker or insurer for one.^[1] The Department of Insurance lists 18 admitted insurers that sell a DIC built for FAIR Plan households, and Menlo quotes two DIC programs, Aegis and Green Shield, alongside the FAIR Plan itself.^[3] To get both quoted together, start on our FAIR Plan and DIC page. Keep one picture in mind: the FAIR Plan insures a short list of named perils, the DIC insures around that list, and each carrier pays only for its own perils. The wrap protects you fully only where the seams line up.

Difference in Conditions (DIC) Policy

A difference in conditions policy is a separate home insurance policy that covers the perils a basic fire policy excludes. Paired with a California FAIR Plan policy, a DIC typically adds back personal liability, theft, water damage, and additional living expenses.

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DIC insurance: the short answers

These are the facts people ask about most. The sections below explain them.

• What does a DIC cover? What the FAIR Plan leaves out, chiefly liability, theft, water damage and fuller loss of use.^[4]
• Does the FAIR Plan sell one? No. It tells policyholders to get a DIC elsewhere.^[1]
• Who sells DIC in California? The Department of Insurance lists 18 admitted insurers, including Mercury's California Automobile Insurance Company, CSAA, Farmers, Nationwide, Foremost, Pacific Specialty, Zurich American and DB Insurance.^[3]
• Which ones can Menlo quote? Aegis, whose stand-alone DIC takes dwelling values up to $3 million, and Green Shield.^[8] We compare them with the admitted list in our guide to the best ways to add coverage to the FAIR Plan.
• Does a DIC raise the FAIR Plan's $3 million limit? No. It fills peril gaps, not limit gaps.^[7]
• Does a DIC cover earthquake or flood? Generally no. Those are separate policies.

What is a difference in conditions policy?

A difference in conditions policy is what the private market sells around a policy that insures too little. The FAIR Plan writes named peril coverage, meaning it pays only for damage from the causes of loss listed on the policy: fire, lightning, internal explosion, and smoke, with options such as vandalism available for extra premium.^[2] Everything else a homeowners policy would normally absorb, from a burst pipe to a dog bite lawsuit, stays with you. The DIC picks up that remainder. The name comes from commercial property insurance, where DIC policies have long filled gaps in standard forms. In California, though, the term now means one thing to most buyers: the FAIR Plan wrap.

Owners often assume the DIC upgrades the FAIR Plan itself, as though buying it converted the fire policy into a full homeowners contract. It does not. The DIC is a separate contract with its own carrier, its own deductible, its own policy number, and its own claims department. Nothing about your FAIR Plan policy changes when you add one. The difference is that the losses the FAIR Plan would have declined now have somewhere to go.

What does a DIC policy cover?

A typical California DIC restores four protections: liability if someone is injured on your property, theft of your belongings, sudden water damage, and the cost of living elsewhere while your home is repaired. Side by side, the two policies split a house like this:

Water damage on a DIC means a failed supply line or an overflowing appliance, not rising water from outside. Flood belongs to a flood policy and earthquake to an earthquake policy, exactly as with a standard homeowners program. Notice how often that table says typical and varies. DIC forms are not standardized the way homeowners forms are, so two carriers' wraps can differ on vandalism, on mold, and most of all on how loss of use is triggered.

Who sells DIC insurance in California?

Eighteen admitted insurers, according to the Department of Insurance's list of insurers that sell DIC policies to pair with the FAIR Plan (checked September 27, 2026). The list includes Mercury's California Automobile Insurance Company, CSAA Insurance Exchange, Farmers Insurance Exchange, Nationwide Mutual, Foremost, Pacific Specialty, Standard Fire, Zurich American, DB Insurance and Seaview (Aegis Group).^[3] Menlo quotes Aegis and Green Shield. Our comparison of FAIR Plan add-ons and DIC options sets them side by side. The department scopes the list carefully: these are DIC products built to complement a FAIR Plan policy, not endorsements that broaden a regular homeowners policy you already have. Every company on it is licensed in California, which means most FAIR Plan households can build the whole wrap in the admitted market, where the state guarantee fund stands behind claims if a carrier fails. Our comparison of admitted vs non-admitted carriers explains what that backstop is worth.

Some homes cannot stay in that market. When replacement cost passes the FAIR Plan's residential cap, or heavy brush exposure scares off every listed carrier, brokers turn to surplus lines insurance, where non-admitted insurers write DIC and excess fire coverage with more freedom on price and terms. A surplus lines placement requires a documented diligent search of the admitted market first, and the policy carries surplus lines taxes and no guarantee fund. Ask which kind of carrier is quoting your DIC before you buy.

How do you match a DIC to your FAIR Plan policy?

Treat the two policies as one program, because a claim will. These are the points your broker should line up before either policy is issued:

• Dwelling and contents limits: the DIC should carry the same dwelling and personal property limits as the FAIR Plan policy, so a water loss is not settled against a smaller number than a fire loss would be.
• Deductibles: each policy applies its own deductible to its own claims. Matching them keeps what you pay out of pocket predictable when one event touches both policies.
• Effective dates: same inception date, same renewal date. A DIC bound two weeks after the FAIR Plan policy leaves fourteen days with no liability or theft coverage at all.
• Named insureds: the names and property address must be identical on both policies, including a trust if the home sits in one. A mismatch is a claim delay waiting to happen.
• The loss of use trigger: get a written answer on whether additional living expenses are paid when a FAIR Plan peril, above all fire, forces you out.

What happens when you file a claim on two policies?

Each carrier adjusts only the perils its own policy insures, and nobody adjusts the whole loss. A burst pipe is a DIC claim from first call to final payment, and the FAIR Plan never hears about it. A kitchen fire runs the other way: the FAIR Plan adjusts the structure and smoke damage while the DIC carrier decides, under its own wording, whether your hotel bills are covered. When one event touches both policies, expect two claim numbers, two adjusters, and two deductibles. Give each carrier notice promptly instead of waiting to see which one responds. Late notice to the carrier you guessed wrong about is a denial you handed them.

What does a DIC policy not do?

A DIC fills peril gaps, not limit gaps. The FAIR Plan caps residential coverage at $3 million at one location,^[7] and no DIC raises that number. If your home would cost $5 million to rebuild, the wrap still leaves you $2 million short on the fire side. Closing that gap takes excess property coverage stacked above the FAIR Plan, usually from a surplus lines carrier. The DIC also merges nothing. You pay two premiums, receive two renewals, and carry two policies that can each nonrenew independently. If the DIC carrier exits, the FAIR Plan policy stands while your liability and theft coverage quietly ends, so treat a DIC nonrenewal notice with the same urgency as losing the FAIR Plan itself.

This guide is for educational purposes and summarizes California FAIR Plan provisions, public California Department of Insurance guidance, and common DIC policy practices. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.

The Bottom Line

A difference in conditions policy is the half of your house insurance the FAIR Plan cannot sell you: liability, theft, water damage, and fuller loss of use, written by a private carrier around a bare fire policy. Start it the same day as the FAIR Plan policy, match the limits and deductibles, and get the loss of use trigger confirmed in writing. Have one broker place both policies, because the seams between them are where claims go wrong.