Homeowners Insurance in South Dakota

South Dakota has a rugged landscape, abundant wildlife, and many parks and tourist attractions. Located in the Midwest, it is also prone to tornadoes, earthquakes, floods, and wildfires, all of which cause severe property damage and costly insurance claims. Since 1953, South Dakota has had 64 federally declared disasters, and the rate of disasters per 1 million people is 68.91.

Along with damage claims from hail, windstorms, and floods, South Dakota residents also file insurance claims for fire, lightning damage, water damage due to burst pipes, fallen tree damage, other types of property damage, bodily injury, theft, and medical payments.

No government agency requires homeowners to carry insurance. Experts do suggest that every homeowner has at least some. However, if you take out a mortgage to buy your home, your bank will require you to carry specific coverage limits on the property for the entire life of the loan.

As of October 2024, the national average for home insurance is $2,728 per year or $227 monthly. Homeowners in South Dakota pay an average of $3,113 per year, or $259.42 a month, which is higher than the national average due to the state's turbulent weather.

Homeowners insurance providers decide which states to operate in and what types of coverage to offer based on the expected perils. It's all about risk. Some states have limited providers, where there is more risk. The available types of coverage in South Dakota include:

South Dakota's flood risk is rising yearly, making it essential for homeowners to consider flood insurance. Property owners should also consider an umbrella policy to cover the gaps left by others.

FEMA (Federal Emergency Management Agency) manages the National Flood Insurance Program (NFIP) through a network of 50 providers across the U.S.

Since most homeowners insurance does not cover floods, this supplemental coverage can repair damage and replace items after a flood. It can cover the building and/or your personal belongings, depending on your options. This program is available to homeowners, renters, and businesses. Learn more about the program on FEMA's website.

Severe weather events are occurring all over the U.S. with rising intensity and frequency. These storms and natural disasters cause devastating property damage, leading to claims and insurer losses. Global warming and climate change are the leading factors affecting home insurance rates today. Over the past five years, rates have increased across the board by 34% and as much as 60% in high-risk areas. In South Dakota, homeowners insurance has risen by 41.0%, much higher than the national average.

South Dakota is prone to some severe weather like tornadoes, earthquakes, floods, and wildfires. The average claim for fire damage costs insurance providers $77,340. The average hail and wind damage cost is $11,695, and water damage claims average $11,650. Other types of property damage claims average $13,804. From 2015 to 2019, South Dakota insurance carriers lost a total of $166,040,400. South Dakota makes the list of states with the highest home insurance rate increases. From 1980 to 2024, South Dakota has seen 33 billion-dollar disasters. Black Hills National Forest in South Dakota averages 99 wildfires per year, most caused by lightning and each one damaging 7500 acres of land. South Dakota's flood risk is increasing steadily yearly and ranks the highest for flood-related deaths.

Especially in states where home insurance rates are rising quickly, homeowners are desperate for ways to save. The key is learning what factors into your rates and adjusting from there. Some of the factors that affect home insurance premiums include:

Some ways to save on homeowners insurance in South Dakota include:

• Raise Your Deductible: Raise your deductible as high as possible to lower your rates.
• Improve Your Credit: Boost your credit and then ask your insurance agent to re-evaluate your rates.
• Eliminate Risks: Eliminate as many risks as possible to lower your home insurance rates.
• Bundle Policies: Bundle your home and auto policies, and your carrier will usually give you better rates.
• Don't File Small Claims: Hold off on filing small claims; wait for the big stuff to keep your rates low.
• Shop Around: When looking for a provider, shop around. Ask for recommendations and balance quality with price.
• Make Your Home Disaster-Resistant: Improve your roof, siding, and windows to make your home more weather-resistant and lower your rates as a bonus.
• Ask for Discounts: Ask your insurance agent about any discounts they offer.
• Remain Loyal: Stay with the same insurance provider for many years, and they may reward you with lower rates.
• Improve Home Security: Install a home security system to keep your home safer and lower your insurance premiums.

Home insurance protects your home financially against catastrophic loss after a qualifying event. That means if a fire destroys your house, your insurance company will pay to repair or replace it and restore it to its previous condition. Policies have limits; if you don't have enough coverage, it may not cover the total cost. Home insurance typically includes dwelling coverage, other structures, personal property, liability, medical payments, and ALE insurance.

You can obtain homeowners insurance quickly. Find an insurance provider you want to work with and apply through their website online or call their 800 number. You can also work with a local agent who can help you determine the right coverage and limits based on your situation. You will have to pay the first year in advance, and after that, you can pay monthly through your mortgage escrow. If you own the house outright, you can pay annually.

The most common home insurance discounts offered by reputable firms include:

• Bundling Discount: Bundle multiple policies together with the same carrier for a discount.
• Senior Discount: Most providers offer seniors a discount on their home insurance.
• Military Discount: Military members are eligible for homeowners insurance discounts.
• Veteran Discount: Vets also get discounted rates on home insurance.
• Loyalty Discount: When you stay with the same company for many years, they often discount your rates as a thank you.
• Paperless Discount: Sign up for paperless statements and receive a home insurance discount.
• Auto-Pay Discount: Most providers offer a small discount for auto payments.
• Claims-Free Discount: Stay claims-free for as long as possible, and you should pay less than someone with claims.
• Early Quote Discount: Get quotes in advance and earn a discount on your insurance.
• Fire-Safety Discount: Install fire safety features like sprinklers, fire extinguishers, and smoke alarms to earn a discount on your home insurance.
• Security/Smart-Home Discount: Install a security system or smart home devices that monitor for issues and earn a discount on your insurance.
• New Home Discount: New construction homes earn discounts of up to 40% off.
• Non-smoker Discount: Non-smokers pay less on home insurance than smokers due to reduced fire risk.
• Location-based Discount: Some locations earn discounts for being low-risk and safer.

Common Rates Offer by Homeowners Insurance Firms

New homes cost much less to insure, sometimes up to 40% less. Homes five years old or younger cost up to 26% less. New homes are built with more substantial, better fire-safe materials, offering less risk and making them quicker and easier to rebuild after a disaster. South Dakota new home property owners pay an average of $2,838 a year or $80 monthly, much less than residents living in older homes. However, your actual price will vary based on your customer profile and other factors.

Top 10 Home Insurance Firms in South Dakota and Average New Home Savings

Updating your home can be a fun project to tackle with spectacular results. However, home renovations can also drastically affect your home insurance premiums. Home upgrades increase the value of your home or the risk along with your rates. Others may decrease risk and your insurance rates. Some do both simultaneously, canceling each other out and having no net effect.

Home Renovations that Increase Rates

Some home renovations that increase your rates include:

• Upgrade Kitchen or Bath: Upgrading a kitchen or bath can increase the value of your home by 50% and make it more luxurious, but it will also increase your homeowners insurance premiums.
• Add a Fireplace: Nothing is nicer than a cozy fire on a cold winter's night. However, adding a fireplace will increase your fire risk and your insurance premiums.
• Install a Pool: A pool is fun for the whole family, but it adds extra risk and will increase your homeowners insurance rates.

Home Renovations that Decrease Rates

Some home renovations that decrease your rates include:

• New Roof: A new roof will help your home weather storms better. Decreasing your risk of claims makes your insurance company happy, and they will reduce your rates if you do.
• Upgraded Plumbing: Old plumbing can leak, causing water damage and even flooding. Upgrading your plumbing is good for your house and decreases your rates.
• Home Security or Smart Home: Installing home security or smart home features that monitor your home for intruders and other threats will help to lower your rates also.

Typically, adding new siding strengthens your weather resistance and lowers your insurance rates, but your rates may increase if you choose luxury materials.

Standard maintenance upgrades and elective renovations are not covered by home insurance. Insurance companies only pay to repair or replace your home after a qualifying event. If someone gets hurt on your property during the renovation or steals from you, those things are covered under your policy. Other things not covered are rodent damage, animal damage, and pest infestations.

Always discuss any renovations with your insurance agent before starting work. They can help you understand how the project will affect your rates and coverage and if any changes are necessary.

People who rent apartments, houses, or condos also need protection. Renters insurance is a form of homeowners insurance with a slight difference. It has no dwelling coverage. The property owner must handle that on their own. The primary purpose of renters insurance is to protect your personal belongings. It pays to replace them if they are stolen or destroyed in a covered peril. Renters insurance also includes liability coverage, medical payments, and loss of use. However, every policy has limits, and if you have expensive items like fancy cars, jewelry, or collectibles, they may not be covered.

Some of the items that renters insurance covers are:

Renters insurance is priced according to three main factors, and they are:

Renters in South Dakota pay an average of $12 per month, slightly less than the national average of between $15 and $20 a month.

Condo owners in South Dakota also need home insurance. Like renters, it works slightly differently. HO-6, or condo insurance, is meant to protect condo owners in the event of a disaster. However, condo associations have their own master policy that protects the dwelling and will pay to replace each building after a disaster and restore it to its original condition (when first built). That may not include any updates made by owners. That is where HO-6 insurance comes in to restore the interior to its most recent condition, complete with any updated appliances, flooring, kitchens, baths, etc. Condo insurance also includes liability, medical payments, personal property, loss of use, and loss assessment coverage.

Unlike renters insurance, condo insurance has some dwelling coverage but is limited to only the interior. Also, the liability portion only applies to someone who gets hurt inside the condo, not outside on common grounds.

After a qualifying event, condo insurance pays to replace the following items:

• Appliances
• Flooring
• Interior Walls
• Wiring
• Plumbing
• Light Fixtures
• Cabinets
• Countertops
• Personal Belongings

South Dakota condo owners pay an average of $389/year for condo insurance, which covers $60,000 of personal property, $300,000 of liability, and a $1,000 deductible. The national average is $625, making it more affordable in South Dakota.

Some ways to save on the cost of condo insurance include:

• Shop Around and Compare Prices
• Bundle Your Home and Auto Together
• Increase Your Deductible
• Look for Other Discounts
• Install Safety Features
• Upgrade Your Home with a Security System
• Keep Your Credit Score High
• Avoid Small Claims

The homeowners insurance market is in free fall across most of the United States, with insurers suffering crippling losses each year. In South Dakota, insurance providers have lost money in seven of the past 11 years. In 2022, the state lost more money "as a share of revenue" than any other state. If this trend continues, chances are high that carriers will pull out of the state and will need to limit coverage or cancel some customers.

South Dakota is subject to severe natural disasters like tornadoes, earthquakes, floods, and wildfires, all of which can result in huge claims and losses. Most likely, these events will continue to rise in number and create even more stress on the home insurance industry, eventually making it difficult for residents to find the coverage they need.

The federal government is not responsible for regulating the insurance industry. It is entirely up to each state, which designates an agency or department to monitor providers and rates, investigate customer complaints, and sanction guilty firms. In South Dakota, that agency is the South Dakota Division of Insurance, located at 445 East Capitol Avenue, Pierre, SD 57501.