Difference in Conditions / Difference in Limits (DIC/DIL) Clause
The DIC/DIL clause extends an existing local policy under a Controlled Master Program with the broader conditions (DIC) or higher limits (DIL) of the master policy where the local policy does not respond, or does not fully respond, to a loss.
- Clause type
- Extension
- Origin/Market
- International programme
- Favours
- Insured
- Negotiability
- Negotiable
Purpose
In a Controlled Master Program, locally admitted policies exist alongside the master policy, and their conditions and limits differ from country to country. The DIC/DIL clause bridges these differences: if the local policy does not respond to a loss because it does not cover the event (difference in conditions), the master policy’s broader cover steps in; if the local limits are exhausted, the master policy provides additional limits (difference in limits).
Effect and limits
The clause necessarily requires that a local policy actually exists — in countries where non-admitted insurance is not permitted and no local policy is in place, it cannot operate; FINC clauses are designed for that scenario. Even where a local policy exists, local regulations can delay or restrict payment under the DIC/DIL clause, for example where cross-border remittances require prior approval.
Negotiation and practice
When designing a programme, it must be clarified whether the DIC/DIL clause applies automatically to every loss or requires separate notification and review, and how it interacts with the difference-in-conditions concept familiar from German and Swiss market practice. Coordination with the participating local insurers is also essential, since the master policy can only respond if it receives the relevant loss information from the affected country in a timely manner.