Comparison
Earthquake DIC vs. Standard Property Insurance: What Does DIC Add?
Standard commercial property policies typically exclude earthquake damage entirely, while a Difference in Conditions, or DIC, policy adds earthquake and often flood coverage on top of that base.
A standard commercial property policy generally excludes earthquake damage outright, leaving that exposure entirely uninsured unless a separate policy addresses it. A Difference in Conditions, or DIC, policy is specifically designed to fill that gap, adding earthquake, and sometimes flood, coverage that sits alongside or above the standard property policy.
Standard commercial property insurance is built around perils like fire, wind, and theft, but earthquake damage is almost universally excluded from these base policies. For businesses in seismically active states, that exclusion represents a significant and often overlooked gap.
A Difference in Conditions policy, commonly called DIC, exists to close that gap. Rather than replacing the standard property policy, it typically works alongside it, adding coverage for perils the base policy excludes, most notably earthquake and, in some structures, flood.
Understanding what your standard property policy actually excludes, and how a DIC policy fills that space, is essential for any business operating in an earthquake-prone region. This comparison walks through how the two work together rather than as competing choices.
Earthquake DIC Policy
A Difference in Conditions policy that adds earthquake coverage
Strengths
- Specifically fills the earthquake exclusion left open by standard property policies
- Can often be structured to also address flood exposure in the same policy
- Allows businesses to tailor earthquake limits and deductibles separately from the base property program
- Available as a standalone purchase rather than requiring a full policy replacement
Where it falls short
- Adds a separate premium on top of the standard property policy
- Earthquake deductibles are often percentage-based and can represent significant exposure
- Coordination between the DIC policy and the underlying property policy is important to avoid coverage gaps
Best for
Businesses in seismically active states that want dedicated earthquake protection beyond what a standard property policy provides.
Standard Commercial Property
Base property coverage that excludes earthquake damage
Strengths
- Covers common perils like fire, wind, theft, and water damage from non-flood sources
- Forms the foundation that a DIC policy is designed to supplement
- Often required by lenders and landlords regardless of seismic exposure
- Available broadly across nearly every industry and location
Where it falls short
- Almost universally excludes earthquake damage from its base coverage
- Business owners may not realize the exclusion exists until reviewing the policy closely
- Does not typically include flood coverage either without a separate policy
Best for
Every business needing baseline property protection, regardless of whether earthquake exposure applies.
Side by side
| Earthquake DIC Policy | Standard Commercial Property | |
|---|---|---|
| Earthquake coverage | Included, this is the policy's purpose | Excluded from the base form |
| Relationship to base policy | Supplements the standard property policy | The foundational property policy |
| Flood coverage | Sometimes included depending on structure | Excluded, requires a separate flood policy |
| Deductible structure | Often percentage-based on earthquake limit | Typically flat-dollar or percentage for named perils |
| Who typically needs it | Businesses in seismically active states | Nearly every business with a physical location |
| Purchase structure | Standalone policy layered alongside property coverage | Often the base of a broader property program |
The gap most businesses do not notice
It is a common surprise for business owners to learn, often only after reviewing their policy in detail, that standard commercial property insurance excludes earthquake damage. The exclusion is nearly universal across the industry, not a quirk of any one insurer.
For businesses located far from active fault lines, this exclusion may be a non-issue. For those in seismically active regions, it represents a meaningful and sometimes surprising gap between what they assume is covered and what actually is.
How DIC coverage fills that gap
A Difference in Conditions policy is built specifically to cover the perils a standard property policy leaves out. Earthquake is the most common reason businesses purchase a DIC policy, though some DIC structures also address flood exposure, particularly for businesses that want both gaps closed under a coordinated program.
Because a DIC policy is designed to work alongside the standard property policy rather than replace it, coordination between the two matters. Limits, definitions, and deductibles should be reviewed together to make sure there is no unintended gap between where one policy's coverage ends and the other's begins.
Weighing the cost of earthquake exposure
Earthquake deductibles under a DIC policy are frequently structured as a percentage of the earthquake limit, which can represent a substantial dollar amount depending on the building's value. Businesses weighing whether to add this coverage typically consider their specific seismic zone, building construction and age, and how disruptive an uninsured earthquake loss would be to their operations.
For businesses in higher-risk zones, particularly those with older or unretrofitted structures, the potential exposure from going without earthquake coverage can be significant enough that the added premium is generally considered a reasonable trade-off.
How to decide
Is your business located in a seismically active state?
If so, review whether your standard property policy excludes earthquake damage, which it likely does.
How old and how constructed is your building?
Older or unretrofitted structures often carry greater earthquake vulnerability.
Would an uninsured earthquake loss threaten your business's survival?
If the answer is yes, a DIC policy is worth serious consideration.
Do you also have unaddressed flood exposure?
Some DIC structures can address both perils together in a coordinated program.
Are your standard property and DIC limits coordinated?
Review both policies together to avoid an unintended gap between them.
The bottom line
Standard commercial property insurance and earthquake DIC coverage are not competing options but complementary layers, and businesses in seismically active areas generally need to actively add DIC coverage rather than assume their base property policy already includes it.
Frequently asked questions
Coverage covered here
Industries this affects
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