A difference in conditions (DIC) policy is the second policy a California FAIR Plan homeowner buys to fill the FAIR Plan’s gaps. The FAIR Plan dwelling policy is a named-peril fire policy: fire and lightning, internal explosion and smoke, plus options such as vandalism. It doesn’t include liability, theft or water damage. A DIC policy, sold by private insurers rather than the FAIR Plan, is designed to combine with the FAIR Plan policy to give coverage similar to a homeowners policy. The Department of Insurance keeps a list of insurers that offer one. Because they are two contracts from two companies, I check the limits and wording of each against the other.
What a DIC policy is
In California home insurance, a difference in conditions policy, which the Department of Insurance says is often called a wrap-around policy, is the companion to a California FAIR Plan dwelling policy. The FAIR Plan describes DIC policies as providing coverages it doesn’t offer, such as water damage, theft and liability, and as designed to combine with a FAIR Plan policy to give coverage similar to a comprehensive homeowners policy. The Department of Insurance says the insurers on its DIC list offer a product that complements a FAIR Plan policy so that someone who buys both has the same or similar coverage as a traditional homeowners policy.
The DIC doesn’t replace the FAIR Plan. It is built around it: the FAIR Plan handles the fire perils, and the DIC is designed to pick up perils the FAIR Plan form doesn’t name. The Department of Insurance notes that a DIC can also supplement other residential fire policies, but pairing with the FAIR Plan is the most common use. What the FAIR Plan is and how it works.
What the FAIR Plan leaves for the DIC
The FAIR Plan dwelling policy is a named-peril policy, which means it covers only damage from the causes of loss it lists. The FAIR Plan names fire and lightning, internal explosion and smoke, with optional coverages such as vandalism and malicious mischief at extra cost, and it suggests DIC, flood or earthquake policies to cover more perils. The Department of Insurance calls it a limited fire policy and lists what it leaves out:
- Liability. Not part of the FAIR Plan’s policy.
- Theft. Also outside the FAIR Plan’s named perils.
- Water damage. Named by both the FAIR Plan and the department as a gap.
- Additional living expenses and other common coverages. The department lists these alongside the three above and points policyholders who want them to the insurers on its DIC list.
What a particular DIC actually covers depends on its form, so I read its covered perils and exclusions against the FAIR Plan policy instead of assuming the pair adds up to a homeowners policy. What the FAIR Plan does not cover walks through the gaps one by one.
Who sells DIC policies
Not the FAIR Plan. The FAIR Plan says it does not offer DIC policies and points consumers to their broker or to the Department of Insurance, which posts a list of insurers that offer a DIC product designed to complement a FAIR Plan policy.
The department’s DIC policy counts include only the admitted market, and it says additional DIC policies could be written in the surplus lines market. The difference matters if an insurer fails. The notice California requires for surplus lines policies says the insurer does not participate in the insurance guarantee funds created by California law, so those funds will not pay claims if it becomes insolvent. When I bring you DIC quotes, I tell you which kind of insurer each one comes from.
Making the two policies fit
Two policies from two companies mean two sets of limits, deductibles and exclusions. I check:
- Limits. United Policyholders points out that the FAIR Plan covers the home only up to the limits you buy, and the department lists residential FAIR Plan limits of $3 million. I set the DIC’s limits with the FAIR Plan’s in view.
- Wording. United Policyholders advises that the DIC’s wording should match the FAIR Plan policy so there are no gaps, and suggests reviewing how each policy defines the perils it covers.
- Fire stays with the FAIR Plan. The DIC is designed for the perils the FAIR Plan doesn’t cover, so I read how the DIC form treats fire and the other FAIR Plan perils.
- Earthquake is its own policy. The FAIR Plan offers California Earthquake Authority coverage as a separate policy for its dwelling customers. Earthquake insurance in California.
For how I set up a FAIR Plan and DIC placement, see FAIR Plan and DIC coverage.
Many FAIR Plan homes don’t have one
The Department of Insurance’s January 13, 2025 fact sheet found that for every two new or renewed FAIR Plan policies there is one new or renewed DIC policy, a proportion that stayed consistent as the FAIR Plan grew. It also found that from 2020 to 2023 the number of new and renewed DIC policies was approximately 115,000 less than the number of FAIR Plan policies, and said that suggests many FAIR Plan homeowners have no DIC, even though each FAIR Plan policy would have to be paired with one to cover the same perils as a traditional homeowners policy.
The DIC isn’t the only way out of the gap. State law requires the FAIR Plan to run a clearinghouse program that gives admitted insurers the opportunity to offer homeowners policies to FAIR Plan policyholders, and the department’s FAIR Plan page says a comprehensive residential policy option from the FAIR Plan is in progress. Until a home moves to a homeowners policy, the DIC is how a FAIR Plan home adds the rest. See who insures homes in wildfire areas, what to do after a cancellation or non-renewal and non-renewals by ZIP code.
Commercial DIC is a different product
In commercial insurance, IRMI defines difference in conditions as, among other things, an all risks property policy bought in addition to a commercial property policy to cover perils that policy doesn’t insure, usually flood and earthquake. It is the same idea of filling gaps, but it is written for commercial property, not as the companion to a FAIR Plan home policy.
Common questions
Is a wrap-around policy the same as a DIC policy?
Yes. The Department of Insurance says DIC policies are often called “wrap-around” policies, and it uses the term for the policy that supplements a FAIR Plan policy.
Does the California FAIR Plan sell DIC policies?
No. The FAIR Plan says it does not offer them. Private insurers do, and the Department of Insurance posts a list of insurers offering a DIC designed to go with a FAIR Plan policy.
What if I have the FAIR Plan and no DIC?
The FAIR Plan policy covers only its named perils: fire and lightning, internal explosion, smoke and any options you add. Liability, theft and water damage aren’t part of it.
Does a DIC policy cover earthquake?
Plan on earthquake being separate. The FAIR Plan offers California Earthquake Authority coverage as its own policy for FAIR Plan dwelling customers, and the DIC form’s exclusions say what it leaves out.
Can a DIC go with something other than the FAIR Plan?
Yes. The Department of Insurance says DIC most commonly supplements a FAIR Plan policy but can also supplement other residential fire policies in the admitted and surplus lines markets.
Sources
- California FAIR Plan: Difference in Conditions (DIC)
- California FAIR Plan: Dwelling Fire policy
- California FAIR Plan: Earthquake
- California Department of Insurance: California FAIR Plan
- California Department of Insurance: insurers offering DIC policies
- California Department of Insurance: Fact Sheet on Residential Insurance Policies and the FAIR Plan (January 13, 2025)
- California Insurance Code §10095(i) (FAIR Plan clearinghouse program), text via California Public Law
- California Insurance Code §1764.1(b) (surplus lines notice), text via California Public Law
- IRMI: difference-in-conditions (DIC) insurance
- United Policyholders: The lowdown from UP on the California FAIR Plan
General information about difference in conditions (DIC) policies and the California FAIR Plan as of October 2026, not legal advice; the terms, conditions and exclusions of the policies actually issued control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.