Does a DIC policy cover earthquake or flood?
Two very different policies share the name DIC, and only one of them adds earthquake and flood.
The naming collision, in one table
This is the single most confusing thing about DIC coverage in California, and it is a naming problem rather than a coverage problem. Two products share an abbreviation. Which one someone means depends entirely on what sits underneath it.
| FAIR Plan companion DIC | Standalone DIC | |
|---|---|---|
| What sits underneath it | A California FAIR Plan fire policy | A standard property policy, or none |
| Why it exists | To add back what the FAIR Plan excludes | To add perils a standard policy excludes |
| Earthquake | No - separate policy | Commonly the main reason to buy it |
| Flood | No - separate policy | Commonly included |
| Liability, theft, water damage | Yes, this is the point of it | Usually not - the base policy has them |
| Who is typically offered it | California homeowners on the FAIR Plan | Commercial and larger habitational risks |
Why the FAIR Plan wrap leaves earthquake and flood out
A FAIR Plan companion wrap is scoped to one job: restoring the coverages a FAIR Plan policy does not include. The FAIR Plan is a named-peril fire policy - fire and lightning, internal explosion, and smoke, with vandalism available as an optional extra (California FAIR Plan, Dwelling). So the wrap adds liability, theft, water damage, and broader loss of use.
Earthquake and flood are not on that list because they are not gaps the FAIR Plan created. They are excluded from essentially every standard homeowners policy in the country, for the same reason: the losses are geographically concentrated and correlated, so they are underwritten and priced in their own markets. A wrap designed to make a FAIR Plan behave like a standard HO-3 will therefore reproduce the standard HO-3's earthquake and flood exclusions, not fix them.
That means a home on a FAIR Plan plus a DIC wrap can still need two more policies to be fully covered. See earthquake insurance in California and flood insurance in California for how each is bought.
What a fully covered hard-to-place home actually needs
Once you see the pieces laid out, the structure stops being mysterious. A wildfire-exposed California home that has been pushed out of the standard market and wants comprehensive protection is usually buying three or four separate contracts.
| Policy | What it covers | Required? |
|---|---|---|
| FAIR Plan | Fire, lightning, internal explosion, smoke | Yes - it is the fire core |
| DIC companion wrap | Liability, theft, water damage, broader loss of use | Practically yes, or you have fire cover only |
| Earthquake policy or endorsement | Shake damage to the structure and contents | Optional, and separate |
| Flood policy (NFIP or private) | Rising water and flood damage | Optional unless a lender requires it |
Four premiums is a real cost, and it is exactly why it is worth checking whether one admitted or surplus lines policy can do the job instead before you commit to the stack.
How to tell which DIC you are being offered
You do not have to take anyone's word for it. Three questions settle it in about a minute:
- What is the underlying policy? If the answer is a FAIR Plan policy, it is the companion wrap and earthquake and flood are almost certainly out.
- Does the quote name earthquake or flood as a covered peril? A standalone DIC that adds them will say so explicitly and price for it. A companion wrap will not mention them except in the exclusions.
- What does the exclusions page say? Read it directly rather than the summary. Earthquake and flood exclusions are stated plainly on almost every form.
If you are unsure, send us both declarations pages and we will read them with you. See how to read a DIC declarations page for what to look at line by line.
Sources
Figures and definitions on this page come from the regulator or the body that publishes them. Each link was checked on the review date above.
- Dwelling policies - what the FAIR Plan covers California FAIR Plan
- Difference in Conditions (DIC) California FAIR Plan
- Glossary of Insurance Terms California Department of Insurance
Frequently asked questions
Does a California FAIR Plan DIC policy cover earthquake?
Almost never. The FAIR Plan companion wrap is built to add back liability, theft, and water damage, not earthquake. Earthquake is bought as a separate policy or endorsement, most often through the California Earthquake Authority or a private market. Confirm it against your own DIC form, because DIC forms are not standardized.
Does a DIC policy cover flood?
Not the FAIR Plan companion kind. Flood is excluded from essentially every standard homeowners policy and from the wrap that mimics one, so it is bought separately through the NFIP or a private flood market. A different product also called a standalone DIC does add flood, but it is mostly used on commercial property.
Why are there two policies called DIC?
Difference in conditions just means a policy that covers the difference between what you have and what you need. That describes both a FAIR Plan companion wrap and a standalone policy that adds earthquake and flood to a standard policy, so the industry uses the same name for both. The only reliable way to tell them apart is to ask what policy sits underneath.
Can I add earthquake to my FAIR Plan instead?
The FAIR Plan does offer earthquake coverage as its own separate policy rather than as part of a dwelling policy or a DIC wrap. Whether that or a private earthquake policy is the better buy depends on your home and limits, and we can price both.
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