All over the country and around the world, natural disasters and man-made catastrophes seem to happen on a daily basis. Earthquakes, hurricanes, fires, and flooding have begun to take their toll in certain areas, causing ripple effects in the insurance industry.
After several years of hurricanes in the late 90s and early 2000s, Florida created Citizens Property Insurance Corporation in 2002. This was to be the insurer of last resort for homeowners, condominium associations, and co-ops that could no longer find property and/or wind insurance coverage through the open market.
Much like the FAIR Plan in California, Citizens offered coverage that was basic perils only. While it did cover windstorm, hail and hurricane coverage, it left many other important perils uninsured.
Situations like this are where a Difference in Conditions (DIC) policy comes in handy. Read on to find out more about DIC and if this coverage is right for you.
What is Difference in Conditions?
A Difference in Conditions policy is the property insurance equivalent of “gap” coverage. This coverage can be written to cover many different perils that may not be covered by a standard property insurance policy. If you want or need coverage not offered under your personal lines or commercial policy coverage, DIC is right for you.
Some of the most important coverage items include:
- Perils to bring either basic or broad form up to special form, such as:
- Weight of ice, snow or sleet
- Collapse from specified causes
- Falling objects
- Water damage (in the form of leakage, not flooding)
- Earthquake (earth movement)
Are All DIC Policies the Same?
There is no standard DIC policy. Every carrier writes Difference in Conditions policies on a manuscript format which allows the coverage to be tailored to the specific needs of the policyholder.
It is important when considering a DIC policy that you work with your broker to determine where your coverage gaps are and how best to cover them. You should also carefully review the policy language with your broker to be sure that you are getting both what you pay for and what you need from that coverage.
Do You Need DIC Coverage?
Not every person or business needs DIC coverage. If your broker has been thorough and offered earthquake and flood and you’ve purchased those policies, you may not need DIC. However, there are some instances where it is needed:
- You have a FAIR Plan policy for your home or business. These are basic form coverage and do not offer the covered perils you need.
- You have a basic or broad form property policy. Check your policy or review with your broker.
- You don’t have earthquake or earth movement coverage.
- You don’t have flood coverage.
- Your special form policy excludes specific perils that you feel need coverage.
The best course of action is to pull out your property policy, dust it off and call your insurance broker to review what you have versus what you need to properly insure your property investments.
Hayes Brokers offers a free, no-obligation risk analysis to current and prospective clients. Bring us your current policies and we will review them to determine whether DIC coverage is right for you.