Difference in Conditions Coverage: What Is It and Who Needs It?

Adjusters International Disaster Recovery Consulting

Difference in Conditions Coverage – What Is It and Who Needs It?

By Robert J. Prahl, CPCU

A Difference in Conditions (DIC) policy is a form of property insurance that is purchased in conjunction with an underlying commercial property policy. Its purpose is to obtain coverage that is not provided in the underlying property policy, most notably for the perils of flood and earthquake. Some insurers offer DIC endorsements to their commercial property policies which serve the same purpose.

Originally, a DIC policy was referred to as a “gap filler,” because it provided coverage against all risks of loss (now more aptly referred to as open perils or causes of loss special form ) and was written along with...


“Gap filler.” It was an early and well- earned nickname for the insurance protection more formally known as Difference in Conditions (DIC) coverage. Well earned because DIC’s versatility enables a business owner to protect against losses that are either not covered in a standard property policy or not covered adequately.

The versatility and the flexibility that DIC policies offer, however, have also created a lack of uniformity in how they are worded, structured and applied. The consequent misunderstanding or even unawareness of the coverage has resulted in too many commercial insureds not taking advantage of the valuable “gap-filling” protection a DIC policy can provide.

In this issue of Adjusting Today, insurance expert Robert Prahl explains the key components of DIC coverage — including what it is, what’s covered, where it can be most useful, who needs it and how a policy is structured. He goes even further, discussing such specifics as limits, deductibles, court cases involving DIC and the importance of proper wording and careful review when a DIC policy is put in place.

It’s information that could be critical to the recovery or even survival of your business should a major loss occur.

Sheila E. Salvatore Editor