What is a difference in conditions policy?
A difference in conditions policy (DIC) is a second policy that layers on top of a stripped-down property policy and covers what that policy leaves out. In residential use, the bare-bones policy is almost always a state FAIR Plan; the DIC adds back liability, theft, water damage, food spoilage, and the other standard coverages.
The term predates the residential market. IRMI defines a DIC as additional limits for specific perils plus coverage for perils excluded on standard forms; historically it has been a commercial-real-estate tool for earthquake and flood. The homeowner version grew alongside the state FAIR Plans of the 2020s.
In California, the state Department of Insurance maintains a public list of admitted carriers writing DIC policies that complement a FAIR Plan policy (verified May 2026). How the two policies actually pay together is the next section.
Why this term is in front of you
Most readers land here in one of three moments. The non-renewal letter just arrived from the carrier you've used for years. A lender flagged a binder gap two weeks before close. Or the renewal quote came back at three times last year's premium, and the agent mentioned a "FAIR Plan with a wrap." In each case the math points to the same answer: a bare-bones state insurer-of-last-resort policy paired with a difference-in-conditions policy, the "wrap" that fills the liability, theft, water-damage, and food-spoilage gaps the FAIR Plan leaves open.
The cost of getting this wrong is concrete. Skip the DIC, then have a kitchen fire that injures a guest, and the liability claim falls on you personally, because a typical FAIR Plan policy carries no personal liability coverage at all. The companion policy is meant to add it back. As the California Department of Insurance puts it, a DIC product is sold "so that the consumer who buys both has the same or similar coverage as a traditional homeowners policy." If you are standing in one of those three moments, see the non-renewal-notice playbook for the next steps.
How a DIC policy actually works
A DIC is a separate admitted-market policy issued by a different carrier than the FAIR Plan. The FAIR Plan writes the basic dwelling (typically fire and a short list of extended-coverage perils); the DIC writes everything else the standard homeowners form would have included: personal liability, theft, water damage from plumbing, food spoilage, additional living expense, and, depending on the form, named-peril or open-peril extensions for the dwelling itself. IRMI defines a DIC as adding limits for specific perils when standard markets won't provide adequate limits and covering perils excluded on standard forms; the same logic is applied here to the FAIR Plan's narrow form.
Two policies, two carriers, two premiums, two claim numbers. The DIC carrier and the FAIR Plan share no contract with each other; the homeowner (and the lender, where there's a mortgage) holds both. Coverage limits on the DIC are set independently of the FAIR Plan's dwelling limit. The buyer sets the DIC's liability, contents, and ALE limits the way they would on a standalone HO-3, but the DIC's dwelling exclusion typically tracks the FAIR Plan's coverage so the two don't overlap on the same peril.
As of May 2026, the California Department of Insurance's list of insurers selling DIC policies names roughly 28 admitted carriers and brand subsidiaries, organised under the Aegis, Farmers, Kemper, and Nationwide groups. That makes California the clearest reference point for who actually writes the wrap. Outside California, DIC availability is patchier; some states write it through admitted carriers, others route it to the surplus-lines (non-admitted) market through a specialty broker. See named-peril vs open-peril for what the FAIR Plan side typically excludes and the DIC therefore has to pick up.
Who needs one
If you've been moved to a FAIR Plan, you likely need a DIC. The FAIR Plan covers fire and a few extended-coverage perils. Everything else (liability, theft, water damage from a burst pipe, food spoilage after an outage) sits outside it. A DIC fills that gap.
Where this applies depends on your state. In states that run a FAIR Plan, a DIC pairs with the plan to approximate normal homeowners coverage. Elsewhere the residual-market route is usually a surplus-lines (E&S) carrier instead, and a DIC isn't the answer; see the states index for which path applies where.
Coastal homes face a different gap. Wind and hurricane are often excluded by a state's beach or windstorm pool, so the DIC concept is sometimes applied to wind exclusions rather than to a FAIR Plan. Owner-occupied policies and investor or landlord forms (DP-1, DP-3) aren't drop-in equivalents. If you rent the house out, ask your broker which form your dwelling policy uses before sizing the DIC.
If you just got a non-renewal letter, the practical next move is to read your current declarations page for the policy form number, then check your state Department of Insurance page for the residual-market route. In California, the California Department of Insurance publishes a list of admitted DIC carriers (about 28 individual carriers and brand subsidiaries as of May 2026), which is the closest thing to a 'who actually sells this' answer.
How to find a DIC policy
The DIC market is narrow, but the path is straightforward. Most homeowners arrive here because a FAIR Plan policy is the only quote they can get and they need to fill in what it doesn't cover.
- Start with an independent agent who writes both admitted and surplus-lines carriers. Ask specifically whether they can pair a DIC with your FAIR Plan policy. Captive agents (one carrier only) usually can't.
- In California, check the California Department of Insurance published list of admitted DIC carriers. Other states don't publish one; an independent agent is the route.
- Read the FAIR Plan and DIC quotes side by side. Look for gaps: a peril excluded by both, a sublimit too low on either, dwelling limits that don't match.
- Confirm replacement-cost versus actual-cash-value treatment on each policy. A FAIR Plan that pays ACV paired with a DIC that pays replacement cost is a common mismatch and a nasty surprise after a loss.
- Try to align the two renewal dates. Two policies with separate renewals mean two chances a year for a non-renewal letter; if one lands, the non-renewal playbook walks the next 60 days.
Frequently asked questions
Is a DIC the same as a homeowners policy?
No. A DIC is a companion policy that layers on top of a bare-bones policy like a FAIR Plan; together they approximate a standard homeowners policy (California Department of Insurance). It can't replace a homeowners policy on its own.
Where does the name 'difference in conditions' come from?
The name predates residential use. In commercial property insurance, a DIC layer covers the 'difference' between perils a standard policy excludes (typically flood and earthquake) and what an owner actually wants insured (IRMI).
Do I need a DIC if I have a regular homeowners policy?
Usually no. The DIC product was designed to pair with a bare-bones state-pool policy so the buyer ends up with "the same or similar coverage as a traditional homeowners policy" (California Department of Insurance). A standard HO-3 or HO-5 from an admitted carrier already includes the liability, theft, and water-damage coverage a DIC adds back.
What happens at claim time if I have a FAIR Plan but no DIC?
IRMI defines a DIC policy as adding back perils excluded on the standard form, which on a FAIR Plan typically means personal liability, theft, water damage, and loss of use. Without it, a guest injury or a burst pipe falls on you personally; the FAIR Plan pays only on the perils its form names, typically fire and a few extended-coverage perils, up to the dwelling cap.
Is a DIC policy issued by the FAIR Plan itself?
No. The FAIR Plan writes only the bare dwelling; a DIC is a separate policy from a different carrier, typically an admitted insurer the homeowner buys through a regular agent. Two policies, two premiums, two claim numbers.
Where can I see which carriers actually sell DIC policies?
For California, the CDI publishes a current list of DIC-writing insurers, naming roughly 28 carriers and brand subsidiaries under the Aegis, Farmers, Kemper, and Nationwide groups. Other state DOIs vary; most don't publish a comparable list.
Does the DIC have to come from the same carrier as the FAIR Plan?
No. They are separate contracts and almost always different carriers: the FAIR Plan is the state-chartered pool, the DIC is an outside admitted (or surplus-lines) insurer. A broker or independent agent coordinates the two.
Do landlords need a DIC if their rental is on a FAIR Plan?
Sometimes. Investor dwelling forms (DP-1, DP-3) cover the building differently from a homeowners policy, and a DIC sized for an HO-3 won't drop in cleanly. Ask your broker which form your dwelling policy uses before adding one.
Does a DIC help if you're in a state without a FAIR Plan?
Usually not. Without a FAIR Plan, the residual-market path is normally a surplus-lines (non-admitted) carrier, which writes a fuller policy than a FAIR Plan would. A standalone DIC is uncommon outside states where buyers routinely pair one with a plan.
Is a DIC required if you have a mortgage?
Your lender requires coverage that satisfies its insurable-interest rules, not specifically a DIC. A FAIR Plan alone may not meet those rules because it excludes liability and several common perils, so a DIC is often added to get there. Confirm with your loan servicer.
Is a DIC policy worth it alongside a FAIR Plan?
The DIC fills the gaps a FAIR Plan leaves: liability, theft, water damage, food spoilage. Without one, those losses aren't covered.
Where do I buy a DIC policy?
Through an independent agent who writes both admitted and surplus-lines carriers. In California the state DOI publishes an admitted-carrier list; most other states don't.