Increasingly businesses of all sizes undertake operations in other territories and countries and this is no longer limited to the larger multi-national organisations. These businesses will have insurance exposures and risks in different countries and many of these risks will be insured locally in that territory, often under a legal requirement to do so. The cover provided by the locally issued policies may not provide the same level or cover as the organisations primary insurance policy as certain covers may not be locally available. The organisations may therefore be exposed to losses in certain territories as a result of more restricted cover or lower limits than they would be under their main insurance policy.
Assuming that the company has arranged the main insurance programme in accordance with their desire to protect themselves against loss, then there is an exposure that they are not happy to accept. This exposure can be addressed by the inclusion of a Difference in Conditions Clause (DIC) and a Difference in Limits Clause (DIL).
What is a difference in conditions clause?
The difference in conditions or DIC clause may appear on an organisations primary insurance policy and provides that the cover under the policy can “trickle down” to fill any gaps in cover that are left exposed by locally arranged insurance programmes.
What is a difference in limits clause?
This difference in limits or DIL clause is written into the organisations primary insurance policy an allows the cover to “trickle down” to supplement any limits on a locally arranged insurance policy in order to provide the same limits as the primary insurance policy.
Who needs DIC and DIL Insurance?
The cover is required by any organisation with operations that are located in different territories and insured locally but who require a uniform level of cover and limits for their international and global insurance programme.