If your homeowners insurance was non-renewed and you’re shopping for replacement coverage, you may have come across a Difference in Conditions (DIC) policy.
A common question we hear at Starwest Insurance Services is:
“Can I just buy a DIC policy and skip the California FAIR Plan?”
In most cases, the answer is no.
A DIC policy is generally designed to work alongside a California FAIR Plan policy—not replace it.
Understanding the difference could save you from a costly mistake and help ensure your mortgage company accepts your insurance coverage.
What Is a DIC Policy?
A Difference in Conditions (DIC) policy is designed to fill coverage gaps that exist in a California FAIR Plan policy.
Since the FAIR Plan primarily covers fire and a limited number of named perils, a DIC policy may provide additional protection such as:
- Personal Liability Coverage
- Theft Coverage
- Water Damage Coverage
- Additional Living Expenses (Loss of Use)
- Medical Payments Coverage
- Broader Property Coverage
Think of a DIC policy as the “other half” of the insurance package.
[IMAGE PLACEHOLDER 1]
Alt Text: Homeowner learning how FAIR Plan and DIC policies work together.
Why a DIC Policy Usually Isn’t Enough
The biggest reason is simple:
Most DIC policies do not provide primary fire coverage.
The California FAIR Plan is typically the policy that insures the dwelling against fire, smoke, lightning, and other covered named perils.
Without the FAIR Plan, there may be no primary coverage protecting the structure itself from a major fire loss.
Because mortgage lenders require property insurance that protects the home serving as collateral for the loan, a DIC policy by itself often does not satisfy lender requirements.
What Mortgage Companies Usually Want
Mortgage companies generally require:
✅ Dwelling Coverage
✅ Replacement Cost Coverage
✅ Continuous Insurance Coverage
✅ Mortgagee Clause
✅ Protection Against Major Property Losses
If the policy does not provide adequate coverage for the dwelling itself, the lender may reject the coverage or require additional insurance.
A DIC policy alone typically does not meet these requirements because it was never intended to function as a standalone homeowners policy.
[IMAGE PLACEHOLDER 2]
Alt Text: Mortgage lender reviewing homeowners insurance requirements.
When Can a DIC Policy Be Used Without a FAIR Plan?
There are limited situations where a DIC policy may be written as part of another insurance arrangement, but this depends entirely on the carrier and policy form.
For most homeowners who have been placed into the California FAIR Plan due to wildfire exposure or underwriting restrictions, the DIC policy is intended to supplement—not replace—the FAIR Plan.
Always review the policy with your insurance agent and lender before assuming the coverage will satisfy mortgage requirements.
Why Homeowners Need Both Policies
Most homeowners who use the California FAIR Plan carry:
California FAIR Plan
Provides:
- Fire Coverage
- Smoke Coverage
- Lightning Coverage
- Internal Explosion Coverage
Companion DIC Policy
Provides:
- Liability Coverage
- Water Damage Coverage
- Theft Coverage
- Additional Living Expenses
- Medical Payments
- Broader Homeowners Protection
Together, the two policies create protection that more closely resembles a traditional homeowners insurance policy.
[IMAGE PLACEHOLDER 3]
Alt Text: California homeowner protected by both FAIR Plan and DIC coverage.
What Happens If the Bank Rejects Your Coverage?
If your lender determines that your insurance coverage is inadequate, they may:
- Require additional insurance
- Request proof of replacement coverage
- Purchase force-placed insurance on your behalf
Force-placed insurance is often:
- Much more expensive
- Designed primarily to protect the lender
- Limited in coverage
- Not a substitute for a properly structured homeowners insurance program
Frequently Asked Questions
Can I buy only a DIC policy?
In most situations involving a California FAIR Plan placement, no. The DIC policy is generally intended to complement the FAIR Plan, not replace it.
Does a DIC policy cover fire?
Typically, no. Fire coverage is generally provided by the California FAIR Plan or another primary property insurance policy.
Will my mortgage company accept a DIC policy alone?
Usually not. Most lenders require primary dwelling coverage that protects the structure against major property losses.
Why do insurance agents recommend both policies?
Because the FAIR Plan and DIC policy work together to provide more complete protection than either policy alone.
Need Help Understanding FAIR Plan and DIC Coverage?
If you’ve been non-renewed or are struggling to find homeowners insurance in California, we can help you evaluate your options.
At Starwest Insurance Services, we specialize in:
- California FAIR Plan Policies
- Companion DIC Policies
- Homeowners Insurance
- Condo Insurance
- Landlord Insurance
- High Fire Risk Properties
We’ll help you determine whether your insurance package meets your lender’s requirements and provides the protection your family needs.
Contact James Cq Banh
📞 Office: 714-893-7271
📱 Text: 714-867-7799
Starwest Insurance Services
13752 Goldenwest Street
Westminster, CA 92683
Serving Orange County, Riverside County, Los Angeles County, San Diego County, and all of California.
No Broker Fees Since 1995