Difference in Conditions (DIC) Policy: Filling the Gaps in Commercial Property Coverage

A **Difference in Conditions (DIC) Policy** is a specialized commercial property insurance product designed to provide coverage for perils that are explicitly excluded or limited in a standard policy. It is a vital tool for businesses operating in high-risk zones or those with highly customized property needs.

The Primary Use: Filling Excluded Perils

Standard **Commercial Property Insurance** (Article 33) typically excludes major catastrophic perils. The **DIC Policy** is often purchased to specifically cover:

**Earthquake:** Coverage for the structure and contents after seismic activity (Article 31).
**Flood:** Coverage for flood damage, often extending beyond the limited scope of the NFIP (Article 51).
**Landslide/Earth Movement:** Other types of ground instability not covered by standard policies.

The “Difference in Conditions” Advantage

The DIC policy is often written on an “all-risk” (open peril) form (Article 43), giving the policyholder broader coverage than the “named peril” coverage that might be used on their underlying policy. It provides the financial relief needed when the primary policy denies a claim based on a catastrophic exclusion.

Key Characteristics of a DIC Policy:

It does not have a coinsurance clause (a penalty for underinsuring).
It often has a high deductible specific to the catastrophic peril.
It only covers the perils listed, acting as a true “gap-filler.”

Strategic Risk Management: A **Difference in Conditions** policy is a key component in a layered risk strategy, ensuring a business’s assets are protected from region-specific, catastrophic events that standard policies won’t touch.

For any business with significant assets in coastal or seismically active regions, a **DIC Policy** is often a necessary extension of their overall property protection strategy.