The Short Answer: Usually No.
One of the most common questions we receive is:
“Can I just carry the California FAIR Plan and skip the DIC policy?”
If you have a mortgage, the answer is usually no.
Most mortgage lenders require insurance coverage that goes beyond what the California FAIR Plan provides.
Before you cancel your DIC policy, it’s important to understand what your lender requires and what risks you could be exposing yourself to.
What Does the California FAIR Plan Cover?
The California FAIR Plan is designed as an insurer of last resort.
Its primary purpose is to provide basic fire insurance coverage for homeowners who cannot obtain insurance through the traditional marketplace.
The FAIR Plan generally covers:
✅ Fire
✅ Lightning
✅ Smoke
✅ Internal Explosion
✅ Limited Extended Coverage Perils
However, a FAIR Plan policy is not a complete homeowners insurance policy.
What Doesn’t the FAIR Plan Cover?
The FAIR Plan does not provide many coverages that homeowners and lenders expect.
Examples include:
❌ Personal Liability
❌ Water Damage
❌ Theft
❌ Personal Property
❌ Loss of Use
❌ Medical Payments
❌ Personal Injury Coverage
❌ Many Common Homeowners Risks
This is why many homeowners purchase a separate:
Difference In Conditions (DIC) Policy
A DIC policy fills the gaps left by the FAIR Plan.
Typical DIC coverage may include:
Personal Liability
Protects you if someone is injured on your property.
Personal Property
Protects your belongings inside the home.
Water Damage
One of the most important coverages missing from the FAIR Plan.
Loss of Use
Pays for temporary housing if your home becomes uninhabitable after a covered loss.
Medical Payments
Provides limited medical coverage for guests injured on your property.
Can I Carry Only the DIC Policy?
No.
A DIC policy is designed to work alongside the FAIR Plan.
It is not intended to replace the FAIR Plan’s fire coverage.
Think of it this way:
FAIR Plan
Provides Fire Coverage
DIC Policy
Provides Everything Else
Most DIC policies specifically exclude fire coverage because the FAIR Plan handles that portion of the risk.
What Does My Mortgage Company Require?
Every lender is different, but most mortgage companies require:
Coverage A – Dwelling
The home must be insured for at least the lender’s minimum requirements.
Fire Coverage
The lender wants protection for the collateral securing the loan.
Mortgagee Clause
The lender must be listed on the policy.
Continuous Coverage
No lapses are allowed.
Hazard Insurance
The lender typically requires insurance against common hazards that could damage the home.
Will My Bank Accept FAIR Plan Only?
Maybe, but it depends on the lender.
Some lenders only verify that:
- The dwelling is insured
- Fire coverage exists
- They are listed as mortgagee
Other lenders may require broader coverage.
We’ve seen situations where:
✅ FAIR Plan Only was accepted
✅ FAIR Plan + DIC was required
✅ Additional endorsements were requested
The only way to know for certain is to review your lender’s insurance requirements.
Why Carrying FAIR Plan Only Can Be Risky
Even if your lender allows FAIR Plan only coverage, that doesn’t necessarily mean it’s a good idea.
Consider this example:
Water Leak Claim
A pipe bursts and causes $50,000 in damage.
The FAIR Plan generally would not cover this loss.
Without a DIC policy, you could be responsible for the entire repair bill.
Liability Claim
A guest slips and falls on your property.
Without liability coverage, you could be personally responsible for legal expenses and damages.
Theft Loss
Your home is burglarized.
Without personal property coverage, your belongings may not be covered.
New California Insurance Market Changes Mean More Options May Be Available
Thanks to California’s Sustainable Insurance Strategy, many insurance companies are expanding back into California.
As carriers return to the market, some homeowners may qualify for alternatives that were unavailable just a few years ago.
This means you may be able to replace:
FAIR Plan + DIC
with:
One comprehensive homeowners policy.
We Can Shop FAIR Plan Alternatives
If you currently have:
- California FAIR Plan
- FAIR Plan + DIC
- A recent non-renewal
- A home in a wildfire-prone area
We may be able to shop your property with multiple carriers to determine whether an alternative exists.
Many homeowners are surprised to discover they no longer need the FAIR Plan once new market options are explored.
Before You Cancel Your DIC Policy
Ask yourself:
✔ Will my lender accept FAIR Plan only?
✔ Do I have liability coverage?
✔ Am I protected from water damage?
✔ Is my personal property covered?
✔ Do I have loss-of-use protection?
✔ Have I explored alternatives to the FAIR Plan?
The cost of a DIC policy is often small compared to the protection it provides.
Let Us Review Your FAIR Plan Policy
Send us your FAIR Plan declarations page and DIC policy.
We’ll review:
- Your lender requirements
- Your coverage gaps
- Potential FAIR Plan alternatives
- Opportunities to improve coverage
Contact Starwest Insurance Services
James C.Q. Banh
Owner & Broker | CA License #0B83846
Starwest Insurance Services
13752 Goldenwest St.
Westminster, CA 92683
📞 Office: (714) 893-7271
📱 Text: (714) 867-7799
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