What is a DIC policy?

A Difference in Conditions (DIC) policy is supplementary insurance designed to cover the gaps in a basic fire-only FAIR Plan policy. A DIC policy typically provides liability protection, water damage coverage, theft, and other perils that the FAIR Plan does not include. DIC policies are written by California admitted carriers and surplus lines carriers; the policy is paired with the underlying FAIR Plan policy to produce coverage roughly equivalent to a standard homeowners policy.

Is DIC coverage cheaper than standard insurance?

The combined FAIR Plan + DIC cost is almost always higher than equivalent standard homeowners coverage would be — sometimes substantially higher. The DIC policy itself is often cheaper than a standalone homeowners policy because the DIC carrier is not assuming the catastrophic fire risk (the FAIR Plan takes that). But the combined total premium for FAIR Plan + DIC typically exceeds the standard-market premium by 50-200%.

Do I need a DIC policy with the FAIR Plan?

Practically yes for most homeowners. A FAIR Plan policy alone leaves you without liability coverage (a major exposure if anyone is injured at your home), without water-damage coverage (one of the most common claims for any homeowner), and without theft or vandalism coverage beyond limited amounts. Mortgage lenders typically require liability coverage as a condition of the loan, which alone often necessitates a DIC policy.

Where do I get a DIC policy?

California-specialist insurance brokers maintain relationships with the carriers that write DIC policies — these are typically the same admitted and surplus lines carriers writing other California specialty risks. Major DIC-writing carriers include various subsidiaries of Berkshire Hathaway, Liberty Mutual, AIG, and several large surplus lines insurers. Mass-market consumer carriers generally do not write standalone DIC products.

The Comparison

FAIR Plan vs standard insurance: what you lose when you switch.

The coverage gap between a basic FAIR Plan policy and a standard homeowners policy is wider than most homeowners realize. The side-by-side, the DIC policy that closes the gap, and the combined-cost math.

Updated May 28, 2026 · 5–8 minute read

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The fundamental difference

A standard California homeowners policy is written as an HO-3 form (or one of its variants). It is an all-risk dwelling policy paired with named-peril contents coverage, plus liability, plus loss of use, plus a number of supplementary coverages built into the package. The HO-3 covers fire as one of many perils.

A California FAIR Plan policy is structured as a basic fire policy with a small number of named additional perils. It is designed for properties that cannot access HO-3 coverage in the admitted market. Historically the FAIR Plan was fire-only; recent expansions have added vandalism, smoke, and limited theft, but the policy form remains substantially narrower than HO-3.

The coverage comparison

Peril or Coverage	Standard HO-3	FAIR Plan (2026)
Fire	✓	✓
Lightning	✓	✓
Smoke	✓	✓ (expanded 2024)
Vandalism	✓	✓ (added 2024)
Theft of contents	✓	Limited
Wind / hail	✓	✗
Water damage (plumbing)	✓	✗
Falling objects	✓	✗
Weight of snow/ice	✓	✗
Personal liability	✓	✗
Medical payments to others	✓	✗
Loss of use (additional)	✓	Limited basic
Ordinance or law	Often available	Limited

The DIC policy

A Difference in Conditions (DIC) policy is supplementary insurance specifically designed to fill the gap between a basic FAIR Plan policy and the equivalent of an HO-3. The structure: the FAIR Plan policy is primary for fire and the perils it covers; the DIC policy provides coverage for everything else.

A typical California DIC policy covers:

Personal liability and medical payments to others
Water damage from plumbing failures and appliances
Theft of personal property
Falling objects and weight of snow/ice
Loss of use beyond the FAIR Plan's basic limit
Ordinance or law coverage
Various supplementary coverages built into a standard HO-3 (food spoilage, identity theft, etc.)

The DIC policy does not duplicate the FAIR Plan's fire coverage. The two are designed to work together with no overlap.

The combined-cost math

Most California homeowners end up paying more for FAIR Plan + DIC than they would for standard HO-3 coverage — if standard HO-3 were available. Typical examples:

$750,000 Sonoma County home, moderate fire risk. Standard HO-3 (when available): $2,200–$3,500 annual. FAIR Plan: $4,500–$7,500. DIC: $1,200–$2,000. Combined: $5,700–$9,500.
$1.2M El Dorado County foothill home, high fire risk. Standard HO-3 if available: rarely available in this profile. FAIR Plan: $8,000–$14,000. DIC: $1,800–$3,200. Combined: $9,800–$17,200.
$2.5M Pacific Palisades coastal home. Standard HO-3: rarely available 2026. FAIR Plan: $18,000–$28,000. DIC: $3,500–$6,000. Combined: $21,500–$34,000.

The combined cost is most often the practical comparison because in many California neighborhoods the standard-HO-3 option simply doesn't exist — the FAIR Plan + DIC combination is the only available coverage.

When the FAIR Plan + DIC makes sense

When standard HO-3 coverage is unavailable at any price.
When the homeowner needs continuous coverage during a mitigation-and-re-entry path (FAIR Plan + DIC during months 0–18; transition to standard when accepted).
When the underlying property value exceeds the dwelling limits of available admitted-market alternatives.

When surplus lines beats the FAIR Plan combination

For some California risk profiles — particularly high-value coastal homes and combined wildfire-and-other risk properties — a California surplus lines policy offers better coverage at comparable or lower combined cost than the FAIR Plan + DIC. The downside of surplus lines is reduced regulatory protection on rates and renewals. See California Surplus Lines Insurance.

The mortgage lender constraint

California mortgage lenders require continuous property insurance as a condition of the loan. The minimum requirement is typically dwelling coverage at least equal to the loan balance, with liability coverage. A FAIR Plan policy alone does not satisfy the liability requirement — most lenders require a DIC policy or equivalent.

Force-placed insurance (lender-placed coverage) is the worst outcome: a lender purchases coverage on the property when the homeowner fails to maintain coverage, bills the homeowner, and the coverage is typically narrow and expensive. Maintain continuous coverage through the FAIR Plan + DIC combination if necessary to avoid force-placed.

What to do

If you have a FAIR Plan policy, verify you also have a DIC policy in place. If not, a California-specialist broker can write one within a few weeks.
Document the combined coverage to your mortgage lender if needed.
Begin documented mitigation work to support eventual return to the standard market. See How to Get Off the FAIR Plan.

Sources: California FAIR Plan Association 2024–2026 policy forms; California Insurance Code §§10090–10100.2; California Department of Insurance consumer guidance on basic property insurance.

Frequently asked questions

What is a DIC policy?: A Difference in Conditions (DIC) policy is supplementary insurance designed to cover the gaps in a basic fire-only FAIR Plan policy. A DIC policy typically provides liability protection, water damage coverage, theft, and other perils that the FAIR Plan does not include. DIC policies are written by California admitted carriers and surplus lines carriers; the policy is paired with the underlying FAIR Plan policy to produce coverage roughly equivalent to a standard homeowners policy.
Is DIC coverage cheaper than standard insurance?: The combined FAIR Plan + DIC cost is almost always higher than equivalent standard homeowners coverage would be — sometimes substantially higher. The DIC policy itself is often cheaper than a standalone homeowners policy because the DIC carrier is not assuming the catastrophic fire risk (the FAIR Plan takes that). But the combined total premium for FAIR Plan + DIC typically exceeds the standard-market premium by 50-200%.
Do I need a DIC policy with the FAIR Plan?: Practically yes for most homeowners. A FAIR Plan policy alone leaves you without liability coverage (a major exposure if anyone is injured at your home), without water-damage coverage (one of the most common claims for any homeowner), and without theft or vandalism coverage beyond limited amounts. Mortgage lenders typically require liability coverage as a condition of the loan, which alone often necessitates a DIC policy.
Where do I get a DIC policy?: California-specialist insurance brokers maintain relationships with the carriers that write DIC policies — these are typically the same admitted and surplus lines carriers writing other California specialty risks. Major DIC-writing carriers include various subsidiaries of Berkshire Hathaway, Liberty Mutual, AIG, and several large surplus lines insurers. Mass-market consumer carriers generally do not write standalone DIC products.

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