If you’ve recently been told you need a California FAIR Plan, you’ve probably also heard the terms Difference in Conditions (DIC) policy or Companion Policy.
Many homeowners ask:
“Why do I need two insurance policies?”
The answer is simple: The California FAIR Plan only provides basic fire insurance. It is not a complete homeowners insurance policy.
A Difference in Conditions (DIC) policy, also called a Companion Policy, is designed to fill in many of the important coverage gaps left by the California FAIR Plan.
Why Do I Need a DIC or Companion Policy?
Think of the California FAIR Plan as the foundation of your homeowners insurance. It protects your home against fire and certain other named perils—but it leaves out many of the everyday risks homeowners face.
A DIC policy “wraps around” your FAIR Plan policy, providing the broader protection that most homeowners expect from a traditional homeowners insurance policy.
When combined, the two policies work together to provide more complete protection for your home and your family.
How the Two Policies Work Together
Policy #1: California FAIR Plan
The FAIR Plan primarily covers:
- ✅ Fire
- ✅ Wildfire
- ✅ Smoke
- ✅ Lightning
- ✅ Internal Explosion
- ✅ Optional Windstorm (if selected)
Policy #2: Difference in Conditions (DIC) Policy
A DIC policy may provide coverage for:
- ✅ Water damage from burst pipes or plumbing leaks
- ✅ Theft and burglary
- ✅ Personal liability
- ✅ Medical payments to others
- ✅ Personal property (contents)
- ✅ Loss of use (Additional Living Expenses)
- ✅ Falling objects
- ✅ Weight of ice or snow (where applicable)
- ✅ Additional homeowners protections, depending on the carrier
Together, these two policies provide protection that is much closer to a standard homeowners insurance policy.
What Does a DIC Policy Cover?
Coverage varies by insurance company, but many California DIC policies include:
Water Damage
One of the biggest gaps in the FAIR Plan is accidental water damage. A DIC policy often covers sudden and accidental water losses caused by:
- Burst pipes
- Plumbing leaks
- Water heater failures
- Appliance leaks
Personal Liability
If someone is injured on your property or you accidentally damage someone else’s property, a DIC policy can provide liability protection and legal defense.
Theft
The FAIR Plan generally does not cover theft.
A DIC policy helps protect:
- Furniture
- Electronics
- Jewelry (subject to policy limits)
- Clothing
- Appliances
- Personal belongings
Personal Property
Most homeowners want protection for everything inside their home—not just the structure itself.
A DIC policy provides coverage for your belongings, subject to the policy’s limits and exclusions.
Loss of Use
If your home becomes uninhabitable after a covered loss, a DIC policy may help pay for:
- Hotel stays
- Temporary housing
- Restaurant meals
- Additional living expenses while repairs are completed
California FAIR Plan vs. DIC Policy
| Coverage | California FAIR Plan | DIC / Companion Policy |
|---|---|---|
| Fire | ✅ | — |
| Wildfire | ✅ | — |
| Smoke | ✅ | — |
| Water Damage | ❌ | ✅ |
| Theft | ❌ | ✅ |
| Personal Liability | ❌ | ✅ |
| Medical Payments | ❌ | ✅ |
| Personal Property | Limited | ✅ |
| Loss of Use | Limited | ✅ |
| Additional Living Expenses | Limited | ✅ |
Is a DIC Policy Required?
Technically, no.
However, we strongly recommend it.
Without a DIC policy, your home could be protected against fire—but not against many of the most common causes of homeowners insurance claims, such as water damage, theft, or liability lawsuits.
Many mortgage lenders also require broader coverage than the FAIR Plan alone provides.
Who Needs a Companion Policy?
A DIC policy is recommended for homeowners who:
- Have a California FAIR Plan policy
- Live in a wildfire or brush area
- Were non-renewed by their previous insurance company
- Need homeowners insurance to close escrow
- Own a high-value home
- Want protection similar to a traditional HO-3 homeowners policy
Can I Buy a DIC Policy Without a FAIR Plan?
Sometimes.
Some insurance companies offer standalone DIC or specialty homeowners policies, but most California DIC policies are specifically designed to work alongside a California FAIR Plan policy.
Is a DIC Policy Expensive?
The cost depends on several factors, including:
- Home value
- Location
- Coverage limits
- Deductible
- Claims history
- Insurance company
Although purchasing two policies may seem unusual, the combination often provides the best available solution for homeowners who cannot obtain traditional homeowners insurance.
Why Work With an Independent Insurance Broker?
Not all DIC policies are the same.
Coverage, endorsements, deductibles, and pricing can vary significantly between insurance companies. An experienced independent broker can compare multiple DIC carriers and recommend the policy that best complements your California FAIR Plan coverage.
At Starwest Insurance Services, we help homeowners:
- Compare admitted and non-admitted insurance markets
- Secure California FAIR Plan coverage
- Find the right DIC or Companion Policy
- Coordinate coverage with mortgage lenders and escrow companies
- Review options at every renewal to see if a traditional homeowners policy has become available
Frequently Asked Questions
Is a DIC policy the same as a Companion Policy?
Yes. In California, the terms Difference in Conditions (DIC) policy and Companion Policy are often used interchangeably. Both describe a policy designed to complement the California FAIR Plan by providing broader homeowners coverage.
Why can’t the FAIR Plan cover everything?
The California FAIR Plan was created to provide basic property insurance, primarily for fire-related risks. It was never intended to replace a full homeowners insurance policy.
Will my mortgage company require a DIC policy?
Many lenders do. While the California FAIR Plan may satisfy the fire insurance requirement, lenders often require additional coverage—such as liability and water damage protection—to meet their insurance standards.
Can I switch back to a regular homeowners policy later?
Yes. If your home becomes eligible for traditional homeowners insurance, you may be able to replace both your FAIR Plan and DIC policy with a single standard homeowners policy.
Need Help Finding the Right DIC Policy?
If you’ve been non-renewed, declined by multiple insurance companies, or need homeowners insurance before closing escrow, Starwest Insurance Services can help.
We’ll compare traditional insurance companies first. If the California FAIR Plan is your best option, we’ll also help you find the right Difference in Conditions (DIC) or Companion Policy to complete your protection.
Contact Starwest Insurance Services
📞 Office: (714) 893-7271
📱 Call or Text: (714) 231-0897
📧 Email: james@starwestinsurance.com
🌐 Website: https://www.starwestinsurance.com