By the Awan Insurance Team · Reviewed by Shahbaz Awan, Licensed California Insurance Agent (CA Lic #0H95098)
If you have a FAIR Plan policy and nothing else, you have fire coverage and no liability coverage — and most people in that position do not know it. The Difference in Conditions (DIC) policy is the other half. Here is what it does, and where the two contracts tend to come apart.
A Difference in Conditions (DIC) policy is a second policy from a separate carrier that restores what a FAIR Plan policy omits: personal liability, theft, water damage, wind perils, loss of use and medical payments. The FAIR Plan describes the pairing as providing the equivalent of comprehensive homeowners insurance. A DIC is not a standalone policy and does not cover earthquake or flood. The two should be bought together with matched dwelling limits.
Difference in Conditions is an unhelpful name for something quite simple. It is the policy that puts back the coverage a FAIR Plan fire policy does not include — above all your liability coverage, which is the part that protects your savings and your equity if someone is injured on your property. Californians who buy the FAIR Plan alone are frequently unaware they have gone without it.
What Is a DIC Policy?
A Difference in Conditions policy is a second policy from a separate carrier that fills in everything a FAIR Plan policy leaves out.
The name is literal. It covers the difference between the narrow named-peril coverage you have and the comprehensive coverage you would have had. It is not a standalone homeowners policy, and you cannot generally buy one without the underlying fire policy it is designed to sit alongside.
The California FAIR Plan describes the arrangement in its own guidance: if you and your broker cannot secure a policy from another company, your broker can help you find a DIC policy offering additional coverages to provide the equivalent of comprehensive homeowners insurance. Two contracts, read together, approximating one.
"I got the FAIR Plan, so I'm covered." You are covered for fire. Without a DIC you have no liability coverage at all — nothing if someone is injured on your property and sues. You also have no theft coverage and no water damage coverage, and burst pipes are statistically far more common than fire losses. A FAIR Plan policy alone is a fraction of a homeowners policy at a higher price.
What Does a DIC Policy Cover?
Broadly, the perils and coverages a standard homeowners policy would have included — with liability the most important of them.
| Coverage | FAIR Plan | DIC restores it |
|---|---|---|
| Fire, lightning, smoke | Covered | Not needed |
| Personal liability | No | Yes — the critical piece |
| Theft | No | Yes |
| Water damage (burst pipe) | No | Yes |
| Wind, hail, falling objects | No | Typically yes |
| Loss of use | Limited | Typically yes |
| Medical payments to others | No | Typically yes |
| Earthquake & flood | No | Still separate |
Forms vary between carriers more than they do in the standard homeowners market, so the specific DIC wording matters. Two policies marketed the same way can differ on loss of use, on medical payments, and on how personal property is valued.
Where Do the Two Policies Go Wrong Together?
At the seams — mismatched limits, uncoordinated deductibles, and assumptions one policy makes about the other.
Mismatched dwelling limits
If the FAIR Plan Coverage A and the DIC assume different rebuild figures, a claim can fall between them.
Two deductibles
Understand which policy responds to which loss, and what you would pay in each case.
Form assumptions
Some DIC forms assume coverages your fire policy does not actually carry. Read them together, not separately.
Misaligned terms
Different renewal dates mean two separate opportunities to accidentally lapse one half.
Lender acceptance
Your lender needs to accept the combined evidence of coverage. Confirm before binding, not after.
Two claim processes
Different carriers, different adjusters. Know in advance who you call for what.
A household carries a FAIR Plan dwelling limit of $600,000 and a DIC written around an assumed $500,000. A burst pipe causes damage the DIC is meant to handle. Because the DIC was built on the lower figure, the settlement is calculated against a rebuild value that no longer matches the fire policy — and the household discovers the mismatch during the claim rather than at binding.
Nothing exotic went wrong here. Two policies were bought separately, months apart, by people who each only saw half the picture.
Figures are illustrative and used to show how the pieces interact. They are not a quote, an estimate for your situation, or a promise of what any policy would cost or pay. Actual terms depend on underwriting and the policy issued.
How Do You Buy One?
Through the same licensed broker handling the FAIR Plan application, arranged in parallel rather than afterwards.
- Arrange both at once. The DIC should be quoted against the actual FAIR Plan limits, not an estimate.
- Match the dwelling figure across both policies to a single rebuild cost estimate.
- Read the liability limit specifically. This is the coverage the whole exercise exists to restore.
- Compare forms, not just prices. Loss of use, medical payments and personal property valuation vary between DIC carriers.
- Align the renewal dates if you can, so there is one date to remember rather than two.
- Send both declarations pages to your lender together and confirm acceptance in writing.
Start with FAIR Plan eligibility and application, then work through how to build the combined package. If you have just been dropped, read what happens when your insurer drops you first.
Should This Be Permanent?
Treat it as a stopover with a date attached, not a destination.
Two policies cost more in total than one and cover less. The route back to the standard market runs through documented mitigation and an annual re-search. Farmers is our primary carrier, with Foremost and Bristol West alongside it, and through Kraft Lake — the brokerage available to Farmers agents — we can also place business with a broad panel including Mercury, Progressive, Safeco, Bamboo, SageSure, Aegis and National General. Appetites shift, and a file declined last year deserves another look.
There is a policy tailwind too. Under the Department of Insurance's Net Cost of Reinsurance in Ratemaking Regulation, announced in December 2024, insurers using catastrophe modelling in their rates must write comprehensive policies in wildfire-distressed areas equivalent to at least 85% of their statewide market share, rising 5% every two years. The explicit aim is to move households out of the FAIR Plan.
The Bottom Line
A DIC policy is not an optional extra on top of a FAIR Plan policy. It is the half that contains your liability coverage, and going without it to save money means carrying no protection at all if someone is injured on your property.
Buy the two together, match the dwelling figures, read the liability limit, and put a reminder in the calendar to re-search the standard market next year.
If you already have both and have never had them read side by side, bring us the two declarations pages. That review is free and it is exactly the kind of thing that is much better to find now than during a claim.
Related Questions
What is a Difference in Conditions policy in California?
It is a second policy, from a different carrier, that fills in what a FAIR Plan policy leaves out — personal liability, theft, water damage, wind perils and usually loss of use. The FAIR Plan itself describes the two together as providing the equivalent of comprehensive homeowners insurance.
What happens if I carry a FAIR Plan policy without a DIC?
In almost every case, yes. The FAIR Plan dwelling policy is named peril and carries no personal liability at all, so on its own it leaves you with nothing if someone is injured on your property and sues. It also leaves out theft and water damage, and burst pipes are far more common than fire losses.
Can I buy a DIC policy on its own?
Generally not. A DIC is built to sit alongside an underlying fire policy and is not designed to work as standalone homeowners coverage. If you can get a comprehensive policy in the standard market, that is the better answer.
Does a DIC policy cover earthquake or flood?
No. Earthquake and flood stay separate purchases either way — commonly through the California Earthquake Authority and the NFIP or a private flood carrier. Being on a FAIR Plan and DIC build does not change that.
What goes wrong when combining a FAIR Plan and DIC policy?
The failures happen at the seams: mismatched dwelling limits, deductibles that were never coordinated, DIC forms assuming coverages the fire policy does not actually have, renewal dates that drift apart, and lenders who will not accept the combined evidence. Buying both at once, from one broker, prevents most of it.
Is a FAIR Plan and DIC combination meant to be permanent?
It is best treated as a stopover with a date attached. Two policies cost more in total and cover less than one comprehensive policy. Documented mitigation plus an annual re-search of the standard market is the route back, and carrier appetites in California have been moving.
Last reviewed August 2026 by Shahbaz Awan, Licensed California Insurance Agent (CA Lic #0H95098). Coverage descriptions and the DIC pairing cited from the California FAIR Plan Association; market regulation from the California Department of Insurance Net Cost of Reinsurance in Ratemaking Regulation. DIC forms vary meaningfully between carriers — coverage is subject to underwriting and the terms of the policy issued. General information, not advice about your specific policy.