Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Commercial LinesMedium
A large manufacturing plant in Florida has a comprehensive Commercial Package Policy (CPP) covering its property, general liability, and business auto. However, their property coverage specifically excludes damage from floods and earthquakes due to their location. To secure coverage for these perils, they purchase a separate policy designed to fill such gaps. What type of policy have they most likely acquired?
- AA Difference in Conditions (DIC) policy.
- BAn Excess Liability policy.
- CA Catastrophe Liability policy.
- DA standalone Flood Insurance policy.
Show answer & explanationAnswer & explanation
Correct answer: A. A Difference in Conditions (DIC) policy.
A Difference in Conditions (DIC) policy is specifically designed to provide coverage for perils that are typically excluded from standard commercial property policies, such as flood, earthquake, and sometimes war risk. It acts as an 'all-risk' policy for these specific excluded perils.
Why the other options are wrong
- B. Excess Liability provides higher limits for existing liability coverage, not coverage for excluded property perils.
- C. Catastrophe Liability is not a standard insurance term for covering property perils; it usually refers to very high limits of liability coverage.
- D. While a standalone Flood policy covers floods, a DIC policy can cover multiple excluded perils like flood and earthquake under one policy.
Difference in Conditions (DIC) Policy
A specialized property insurance policy that covers perils typically excluded from standard commercial property forms, such as flood, earthquake, and sometimes war.
- Fills coverage gaps in standard property policies.
- Often written on an 'all-risk' basis for specific excluded perils.
- Provides broad coverage where standard policies are restrictive.
Memory trick: DIC: The 'Gap Filler' for Property Perils.