Difference in Conditions
A specialized insurance policy designed to fill gaps in coverage left by standard commercial property policies, typically covering perils like flood, earthquake, or other catastrophic events that are excluded from basic coverage. This policy provides broader coverage terms and higher limits than the underlying primary insurance.
Example
“The manufacturing company purchased a difference in conditions policy to cover flood damage, which was excluded from their standard commercial property insurance.”
Memory Tip
Think 'DIC fills the gaps' - Difference in Conditions covers what your regular policy doesn't.
Why It Matters
Standard commercial policies often exclude major perils like floods, earthquakes, and other catastrophic events that could cause millions in damage. DIC policies prevent businesses from facing uninsured losses that could bankrupt them when these excluded events occur.
Common Misconception
Some business owners think DIC policies are unnecessary if they have comprehensive commercial coverage, not realizing that even the best standard policies have significant exclusions. Others assume DIC policies are prohibitively expensive, when they often provide broad coverage at reasonable rates.
In Practice
TechCorp has a $10 million commercial property policy that excludes flood and earthquake. They purchase a $15 million DIC policy for $25,000 annually that covers these perils with a $100,000 deductible. When a flood causes $3 million in damage, their standard policy pays nothing due to the flood exclusion, but the DIC policy pays $2.9 million ($3M minus the $100K deductible), preventing a catastrophic financial loss.
Etymology
The name literally describes its function - covering the 'difference' between what standard policies cover and the broader 'conditions' or circumstances the policyholder wants protected.
Common Misspellings
Compare insurance quotes and save
Related Terms
More in insurance
Other insurance terms you should know
See Also
Need help with spelling?
Instant spelling checker with dialect variants for 2,000+ words.