DIC Insurance: What It is, Why It's Required, and How to Get It

What is DIC Insurance?

DIC insurance, also known as difference-in-conditions insurance, is an insurance policy that covers the difference between the actual cash value of a damaged vehicle and the amount owed on the vehicle's loan or lease.

DIC insurance is designed to protect drivers who owe more on their vehicle than it is worth. If your vehicle is declared a total loss or destroyed, your standard auto insurance policy will only pay you the actual cash value of the vehicle. The actual cash value of the vehicle is determined by considering factors such as the vehicle's age, condition, and mileage.

If the actual cash value of the vehicle is less than the amount you owe on the vehicle's loan or lease, you will have to pay the difference between the two amounts. DIC insurance can help you cover this difference.

Why is DIC Insurance Required?

DIC insurance is not required by law in most states. However, some lenders may require you to purchase DIC insurance if you are financing the vehicle. Lenders require DIC insurance to protect their financial interests. If your vehicle is declared a total loss or destroyed and you do not have DIC insurance, the lender will not be able to recover the full amount of the loan or lease.

Even if your lender does not require you to purchase DIC insurance, it is still a good idea to consider purchasing it. DIC insurance can provide you with peace of mind knowing that you will not be responsible for paying the difference between the actual cash value of your vehicle and the amount you owe on the vehicle's loan or lease.

How to Get DIC Insurance

DIC insurance is typically added to your standard auto insurance policy. You can purchase DIC insurance through your insurance agent or insurance company.

The cost of DIC insurance varies depending on the value of your vehicle and the amount of coverage you choose. DIC insurance is typically a relatively inexpensive addition to your auto insurance policy.

If you are financing your vehicle, your lender will likely require you to purchase DIC insurance. However, even if your lender does not require you to purchase DIC insurance, it is a good idea to consider purchasing it. DIC insurance can provide you with peace of mind knowing that you will not be responsible for paying the difference between the actual cash value of your vehicle and the amount you owe on the vehicle's loan or lease.