FAIR Plan + DIC: how the two-policy setup works

When standard insurance companies won’t cover a home, often because of wildfire risk, many California homeowners end up on the California FAIR Plan. It’s an important safety net, but it isn’t a full homeowners policy. Most people on the FAIR Plan need a second policy, called Difference in Conditions (DIC), to close the gaps.

What the FAIR Plan is

The California FAIR Plan is the state’s insurer of last resort for property owners who can’t find coverage elsewhere. Its residential policy is a named-peril dwelling fire policy. It covers damage caused by fire, lightning, internal explosion and smoke. Some other perils, such as vandalism, can be added for an extra premium. The residential limit is up to $3 million per location.

The FAIR Plan writes policies for 1 to 4 unit homes, including owner-occupied homes, landlords, renters and condo unit owners.

What the FAIR Plan doesn’t cover

According to the California Department of Insurance, the FAIR Plan’s residential policy does not include:

• Personal liability, if someone is injured on your property and sues
• Theft of your belongings
• Water damage, such as a burst pipe or leaking water heater

A standard homeowners policy covers all three, so going without them is a real gap.

What a DIC policy adds

A Difference in Conditions policy, sometimes called a “wrap-around” policy, is a separate policy from a private insurance company. It’s designed to cover the perils the FAIR Plan leaves out, such as water damage, theft and liability. Together, the two policies come close to the coverage of a standard homeowners policy. Exact coverage depends on the DIC company and the options you choose.

CDI data shows there has been roughly one DIC policy for every two FAIR Plan policies, which suggests many FAIR Plan homeowners have no DIC coverage at all. If you’re one of them, it’s worth a call.

Things to check with a two-policy setup

• Rebuild cost. Make sure the dwelling limit on the FAIR Plan reflects what it would cost to rebuild your home today, not its market value.
• Two deductibles and two bills. Each policy has its own deductible, premium and renewal date. Put both renewal dates on your calendar.
• Which policy pays. A fire claim goes to the FAIR Plan. A water, theft or liability claim goes to the DIC company.
• Your lender. If you have a mortgage, your lender should be listed on the policy covering the dwelling. Check early whether your lender accepts FAIR Plan coverage.
• Re-shop every year. The FAIR Plan is meant to be temporary. After you clear brush, replace a roof, or companies reopen in your area, you may qualify for a standard policy again.

We can help

We place FAIR Plan and DIC coverage and check the standard and surplus lines markets first. Request a review of your home or call (949) 525-0570.

This article is general information. Coverage depends on the terms of the policies you buy.

Sources: California Department of Insurance: California FAIR Plan; CDI fact sheet on residential insurance and the FAIR Plan (Jan. 2025); California FAIR Plan Strategic Plan 2026–2029