What Does DIC Insurance Cover and How It Works

DIC insurance is a specialized policy that provides extra liability coverage beyond the limits of your standard business insurance policy. This type of insurance is often required for businesses with high-value assets or those in industries with high liability risks.

DIC policies can cover a wide range of risks, including damage to adjacent properties, business interruption, and reputational damage.

DIC insurance kicks in when the limits of your standard policy are exhausted, providing an extra layer of protection for your business. This means you won't have to worry about paying out of pocket for damages or losses that exceed your standard policy limits.

DIC policies can be tailored to meet the specific needs of your business, so you can customize the coverage to fit your unique circumstances.

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DIC insurance covers incidents that a standard homeowners insurance policy doesn't, including floods, earthquakes, landslides, and mudslides. These perils are often excluded by standard homeowners insurance policies, but DIC coverage can provide additional protection.

A key benefit of DIC coverage is that it allows you to tailor your policy to common perils in your region. For example, if you live in an area prone to both floods and mudslides, DIC coverage can provide protection against both.

DIC coverage can also provide higher limits than earthquake or flood insurance, which may be especially important if you have a high-value property or live in an area with a high risk of natural disasters.

Here are some examples of perils that DIC coverage can protect against:

These perils can cause significant damage to your property, and DIC coverage can help you recover from the losses.

DIC insurance doesn't cover flood damage, hurricane damage, earthquake damage, or wildfire damage if you live in an area prone to these disasters.

A standard DIC policy also doesn't cover damages beyond the limits of your standard Flood and Commercial Earthquake Insurance.

DIC policies typically exclude coverage for businesses that don't have significant exposure to earthquakes and floods, so not all businesses are eligible for this type of insurance.

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DIC insurance typically doesn't cover perils that a standard home insurance policy covers. Most standard home insurance policies cover a range of perils, including fire, smoke, lightning, windstorm, hailstorm, falling objects, weight of snow, ice, or sleet, theft, vandalism, damage caused by vehicles, and damage caused by aircraft.

Some standard home insurance policies also have exclusions, such as flood damage, hurricane damage, earthquake damage, and wildfire damage in disaster-prone areas.

A standard homeowners insurance policy doesn't cover flood damage, for example, so if you live in a flood-prone area, you may need to add a "difference in conditions" endorsement to your policy.

Here are some examples of perils that a standard homeowners insurance policy typically covers, but a DIC insurance policy wouldn't cover:

DIC policies have separate limits for Earthquake and Flood coverages. This means you'll have a specific limit for each type of coverage.

The Per Occurrence Limit, also known as the Per Claims limit, refers to the total cost that your insurance company will pay you on a per-incident basis. This limit varies depending on the total cost of damages, your policy's Per Occurrence Limit, and your deductible rate.

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For example, if you have a Per-Occurrence Limit of $500,000 and a deductible of 2%, an insurance company will pay your claims up to $490,000, and you'll be responsible for the remaining $10,000.

The Aggregate Limit, on the other hand, refers to the total cost of insurance limits for the whole term of your policy. If you incur losses that exceed your Aggregate Limits before your policy's expiration date, no payments will be given for any following claims.

Here's a summary of the limits of DIC policies:

It's essential to understand these limits to ensure you're adequately protected against catastrophic events.

DIC insurance is a type of coverage that can help protect your home or business against natural disasters like earthquakes, floods, and mudslides.

DIC policies are commonly used by business and commercial property owners to fill gaps in their master insurance policies.

You can purchase DIC coverage through traditional home insurers, specialty insurers, independent insurance agents, or brokers.

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DIC coverage may be sold as a separate policy or as an add-on to an existing policy.

DIC coverage comes with separate coverage limits and a separate deductible, which can bump up the overall cost of protecting your home and belongings.

You can customize your DIC coverage to fit your needs, such as purchasing named-perils or all-perils coverage. Named-perils coverage pays claims only for perils listed in the policy, while all-perils coverage pays claims for any peril not listed in the policy.

Named-perils coverage usually costs less than all-perils coverage.

Here are some key differences between DIC and FAIR insurance:

If you have FAIR insurance, DIC coverage may be a good choice to fill gaps in your coverage. FAIR insurance can cover natural disasters, but it leaves gaps in coverage for theft, liability, and other types of losses.

DIC insurance policies are designed to cover business properties against catastrophic events, including earthquakes and floods. They can also be used as gap fillers or to cover limits beyond standard Flood and Commercial Earthquake Insurance.

DIC policies have higher limits for perils like earthquakes and floods than conventional policies, providing greater protection after a loss. This can be especially beneficial for businesses with significant exposure to these risks.

Some of the areas where DIC coverage may be worth purchasing include:

DIC coverage can cover unique things that ordinary commercial insurance doesn’t cover, including property in transit, business interruption claims stemming from transit losses, and property at overseas locations.

A DIC insurance policy is a type of Commercial Property Insurance that covers business properties against catastrophic events like earthquakes and floods.

This policy can be purchased in addition to standard Commercial Property Insurance, which typically excludes coverage for damages due to flood and earthquake.

DIC policies can only be offered to businesses with significant exposure to earthquakes and floods, not to anyone who wants one.

A DIC policy can be used as a gap filler or to cover limits beyond standard Flood and Commercial Earthquake Insurance.

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The policy has separate limits for Earthquake and Flood coverages, including a Per Occurrence Limit and an Aggregate Limit for each.

The standard Commercial Earthquake Insurance typically has a $500,000 coverage limit, but a DIC policy can kick in to cover excess costs for damages beyond this limit.

DIC policies can cover the difference in conditions between standard insurance and the actual costs of damages, hence the name "Difference In Conditions".

Per Occurrence and Aggregate Limits are two important concepts to understand when it comes to DIC insurance policies.

A Per Occurrence Limit, also known as Per Claims limit, refers to the total cost that your insurance company will pay you on a per-incident basis.

This limit varies depending on the total cost of damages, your insured's Per Occurrence Limits, and its deductible rate.

For example, if you have a Per-Occurrence Limit of $500,000 and a deductible of 2%, the insurance company will pay claims up to $490,000, and you'll pay the remaining $10,000.

The Aggregate Limit, on the other hand, refers to the total cost of insurance limits for the whole term of your policy.

If you incur losses that exceed your Aggregate Limits before your policy expires, no payments will be given for any following claims.

DIC policies provide coverage for losses that are otherwise covered in a standard commercial property policy.

Understanding these limits can help you determine how much coverage you need to protect your business from catastrophic events.

Here's a comparison of Per Occurrence and Aggregate Limits:

Keep in mind that these limits can vary depending on your specific policy and circumstances.

It's essential to review your policy documents and discuss your needs with an insurance professional to ensure you have adequate coverage.

DIC insurance is a type of coverage that fills gaps in standard homeowners insurance policies. It's designed to protect against perils that are typically excluded by standard policies, such as floods and earthquakes.

DIC insurance doesn't cover perils like fire, smoke, lightning, windstorm, hailstorm, falling objects, weight of snow, ice, or sleet, theft, vandalism, damage caused by vehicles, or damage caused by aircraft.

Some of the common things covered by DIC insurance for homeowners include floods, earthquakes, and other severe losses and catastrophes typically excluded by a homeowners insurance policy.

DIC coverage can be a good choice for homeowners with FAIR insurance, which provides coverage for natural disasters as a last resort. FAIR insurance can cover wildfires, windstorms, hurricanes, earthquakes, and other issues in disaster-prone areas, but it leaves gaps in coverage for theft, liability, and other types of losses.

DIC insurance can cover direct losses to a business's personal properties and its building properties against covered perils, including earthquakes and floods. This can include completed additions, machinery, fixtures, and other equipment permanently attached to the building.

DIC insurance can also cover personal property, including fire extinguishing apparatuses, air-conditioning equipment, coverings of the floor, and appliances used for cooking, refrigerating, laundering, and dishwashing.

Here are some common things that DIC insurance can cover:

If you live in an area prone to mudslides, landslides, or floods, consider adding DIC coverage to your policy to fill gaps in your standard homeowners insurance.

In California, DIC insurance is a popular choice for homeowners who obtain coverage through the California FAIR Plan. A FAIR Plan policy provides basic fire, smoke, lightning, and "internal explosion" coverage by default.

Some Californians may want to consider adding DIC coverage to their FAIR Plan policy, especially if they live in a crime-prone area where theft protection is needed.

The California Department of Insurance keeps a list of insurers that sell DIC policies, making it easy to find a provider. A DIC policy can provide theft protection, water damage coverage, and personal liability protection, filling gaps left by a FAIR Plan policy.

If you're a California homeowner with a FAIR Plan policy, you may want to consider combining it with a DIC policy for more comprehensive coverage. This can closely mirror what a standard policy would cover.

Here are some benefits of DIC insurance in California: