State Farm Insurance License Practice Exam

Difference in Conditions Insurance (DIC) is designed to fill gaps in coverage that standard property insurance policies may leave open. It often supplements primary policies to provide broader coverage for specific perils that might not be covered by standard forms.

The primary exclusion of DIC typically pertains to property damage from fire and extended perils, which are usually covered under standard property insurance policies. DIC is intended for situations where an insured party has unique risks not adequately addressed by their existing coverage. While it can provide additional protection for risks such as theft or vandalism, DIC generally does not replace the more comprehensive coverage provided by a standard policy concerning common risks like fire.

By acknowledging that fire and extended perils are already covered, the function of DIC becomes clearer: it allows businesses and property owners to ensure they have coverage for less common or specific risks without duplicating major perils that are included in standard insurance.