Home Insurance in South Dakota

WRITTEN BY: Amelia Ciffone

UPDATED: MAY 24, 2022 | 3 MIN READ

Home insurance is a costly investment – but one of the most important ones you can make in your lifetime. Just one catastrophe to the home can upend a person’s life – home insurance can help with repairs and rebuilding should a fire or tornado claim the home. In South Dakota, home insurance rates run close to the national average, and the state is somewhat less threatened by tornadoes than its neighbors. Getting a detailed picture of what most South Dakota home insurance looks like can help you shape your expectations as you search for your own home insurance.

  • Fun fact:  South Dakota is home to the Mitchell Corn Palace, which is made from over 3500 bushels of corn. But is the corn palace insured?

Average Rates in South Dakota

Home insurance premiums in South Dakota average at $1,202 annually, according to the Insurance Information Institute. Overall, this price is fairly middle-of-the-road – less than $10 below the national average of $1,211. Places with similar home insurance pricing include Washington DC (with $1,235 average premiums) and Tennessee (with $1,196 average premiums)

When it comes to renter’s insurance, South Dakota is nearly the cheapest state in the country, with $123 average premiums. In fact, the only state with lower average premiums is North Dakota, where renter’s insurance premiums average at $120. Even so, there isn’t a large range in renter’s insurance premiums nationwide, and South Dakota only falls below the national average for premiums by $57.

South Dakota Legal Insurance Requirements

There are no laws requiring you to have home insurance in South Dakota. Most often you will be obligated to get home insurance in order to obtain a mortgage. In fact, mortgage lenders can put you on a home insurance if you fail to obtain home insurance or neglect to renew your policy. The kinds of plans mortgage companies favor are often more expensive than consumer-bought home insurance.

There are insurance types common to all South Dakota insurance. This includes coverage for:

  • Dwellings, insuring you for damage to your home, as well as plumbing and electrical wiring. 80% of your home’s replacement value is the standard coverage limit.
  • Other structures applies insurance for damage sustained to man-made structures unattached to your main residence. This can include guest houses, tool sheds, garages, or even driveways and sidewalks. Normally this coverage type has a limit of 10% of your dwelling coverage.
  • Personal Property. Let’s debunk a myth: this insurance is not designed to protect expensive luxury items like art collections, antiques, or jewelry. You need additional endorsements for that. Personal property insurance does however protect items necessary for daily living in a home – furniture, appliances, and clothing among them. Usually, coverage limits are set at 50% of your dwelling coverage.
  • Loss of Use. If you can’t live in your home for a time during repairs (if the damage type was insured), this will help pay for the “extra costs” associated with living out of home – like rent or motel fees. Limits for this kind of insurance are normally around 20% of the money in your dwelling coverage.
  • Personal Liability and Medical Payments. This insurance will come into play if a person besides yourself/your family is injured or their property damaged. Should this person bring a lawsuit against you, saying your negligence allowed this to happen, the insurance will help you pay for legal fees. If the person was injured due to an accident, insurance will help you to an extent in paying for their medical bills.

These types of insurances are offered in several “forms,” which differ based on the range of “perils,” or damaging events, that are insured.

  • The Dwelling Fire Form is the simplest home insurance in South Dakota. Perils it covers include: fire, smoke, windstorm, hail, lightning, explosions, vehicles, and civil unrest.
  • The Basic Form covers the same perils as the Dwelling Fire Form, as well as theft and vandalism. The Modified Coverage Form (reserved mainly for older homes) is identical to the Basic Form, save that insurance is based on actual cash value.
  • The Broad Form covers the same perils as the Basic Form, as well as: falling trees, the weight of ice or snow, and insurance for the sudden accidental rupturing, overflow, or freezing of plumbing, heating, air conditioning, and fire sprinkler systems
  • The Special Form, insures for every peril, save for exceptions that are listed on your insurance policy. Common exclusions include flood, earthquake, war, and nuclear accidents
  • The Tenant’s Form and Condominium Unit Owners Form give Broad Form coverage to personal property, but NOT the complete external structure of the property. Condominium owners can also insure the walls and floor that they own within the condominium complex with Broad Form coverage.

Common Risk Factors in South Dakota

South Dakota is a state relatively free of natural disasters. Wildfires are relatively sparse compared with many other states, and seismic activity is extremely low, making earthquakes uncommon. Dakota’s Department of Public Safety identifies the following major threats to homeowners.

  • Floods. Whether from flash flooding, river flooding, or dry wash – when heavy rain over dry land turns low-lying areas into rivers – South Dakota is no stranger to flooding. It is in fact the most common reason to file an insurance claim for homeowners’ insurance – water damage can destroy personal property as well as cause damage to the structure of a building, putting it in danger of collapse. Standard home insurance will not cover flood damage. You can get flood insurance instead through the National Flood Insurance Program, so long as you live in a community that participates in the program.
  • Tornadoes. South Dakota may not experience as many tornadoes as some other Great Plains States located along “Tornado Alley,” but damage from tornadoes remains a threat to South Dakota homes. South Dakota is ranked 14th in the nation for highest number of tornadoes, according to the National Oceanic and Atmospheric Administration – an average of 36 touch down every year. Most damage is caused by violent winds and debris that slam into buildings. Homes may also be loosened from their foundations or have external structures rooted up and overturned. Any type of home insurance, including the Dwelling Fire Form will offer a measure of protection for tornado-related damages

Insurance Demographics/Statistics in South Dakota

Here’s a scenario: say you have a two story brick home built in 1985, and so does your cousin in Oregon. You both have home insurance from the same company, but somehow your insurance rates are a lot higher than your cousin’s. Why might that be? While home value is important to setting the price of your home insurance, many other factors also contribute to the amount you’ll be asked to pay for your home insurance. Let’s explore some of them.

Your Home’s Value

The greatest contributor to the price of your home insurance will be your home’s value. This is the amount upon which most aspects of your home insurance will be based, and naturally higher home values contribute to higher costs for home insurance.

But how do you evaluate the value of your home? It isn’t the same thing as a home’s sale price, since included in sale prices is the cost of land, which insurance companies don’t consider when setting insurance prices. Instead, insurance companies evaluate home value in terms of replacement cost of actual cash value. Replacement cost means the money it takes to rebuild your home completely, using similar materials and given current labor costs. Actual cash value, on the other hand, is a home’s replacement cost minus value lost from depreciation due to wear and tear, old age, or pre existing damage.

South Dakota homes have somewhat cheaper average home values – $218,416 compared to the national $248,857. This may decrease the overall price of home insurance. If your fictional cousin in Oregon lives in an area where labor costs or the materials to rebuild a home are cheaper, it may explain some of the difference between your home insurance prices.

Local Crime Rates

Where your home is located can also be important in terms of crime rates. A person living in an area with high property crime rates may face higher costs for home insurance than someone living in a low-crime neighborhood, since “high risk” areas tend to have increased coverage costs. Luckily, in South Dakota property crimes are much less prevalent than in the nation at large. According to the FBI Uniform Crime Reporting Program, in 2018 South Dakota had a property crime rate of 1.56%, after excluding car thefts – much lower than the nationwide property crime rate of 1.97%. If your fictional Oregon cousin is paying less for home insurance, it may be because of this!

Even if you do live in an area with high property crime rates, you can be offered deductions to your home insurance if you install deadbolts, or a security system approved by your insurance provider.

Your Income and Education

Even your personal characteristics can be relevant to your home insurance. Insurance companies may offer more favorable rates to people with good credit – population groups associated with having good credit scores include people with higher incomes and a college education. In both these areas, South Dakota falls a little behind the national average. Household income in the United States, as reported by the Census Bureau, averages at $64,179. In South Dakota, household income instead averages at $56,274. And while nationally 32.06% of people above age 25 have earned a bachelors’ degree or higher, in South Dakota just 28.5% of people in that age group have achieved the same.

Where to Purchase Home Insurance in South Dakota

You know more about how home insurance works in South Dakota. To find home insurance specific to your needs, nothing is better than comparing the prices and policies of a wide range of insurance companies. Agilrates.com is here to put in the legwork for you, speedily providing accurate quotes for insurers in your area. Research on competing insurance plans can help even if you already have home insurance – every year at renewal time, you have the chance to switch plans to what works best for you.

According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Use Agilerates.com online form to get matched with a local agent, get free quotes, and shop around!