Difference in Conditions (DIC) Policy

By Riya Srivastava
Updated on July 21, 2019

As the name suggests, a Difference in Condition policy is a type of policy which offers different, additional or extra coverage to the insured as compared to the coverage offered by standard insurance policies.

Insurance companies now a day are likely to provide coverage for perils that occur frequently but their consequences are not severe. Purchasing an Insurance policy for a definite and predictable peril is easier than purchasing Insurance for an uncertain peril with higher severity. However, this doesn’t mean that you can’t get insurance for big catastrophic perils like Flood or Earthquake. DIC policy serves the purpose of providing protection against financial consequences of such losses.

DIC: A SUPPLEMENT TO THE STANDARD POLICY

A DIC Policy, often referred as DIC coverage, is purchased in addition to the standard insurance policy. It is a supplemental policy rather than a replacement to the standard policy.

NEED OF THIS COVERAGE ARISES:

• When the insurer denies coverage for certain perils

• When the premium they charge is higher than what the insured is willing to pay

• When insured require additional limits for Flood, Earthquake or other catastrophic perils.

DIC POLICY FORMS:

Policy form for DIC coverage varies from Insurer to Insurer. It is often based on the requirement of the insured. It can be a Primary Policy or an Excess Policy Form.

When the insured buys DIC coverage as an additional limit to the existing policy, it can be written as an endorsement as well. Despite of various Forms available specifically for this coverage, insurers prefers to write this coverage on tailor-made manuscript forms. Thus, there are no standard policy forms for a DIC policy.