Best Home Insurance in South Dakota

South Dakota has cold, dry winters and hot, semi-humid summers, which bodes well for less inclement weather. As a result, home insurance premiums are relatively low in South Dakota. Have your choice of affordable homeowners insurance providers and can add options or policies as needed to fill any gaps in coverage. Find the best home insurance in South Dakota.

What is Home Insurance?

A homeowners insurance policy offers financial protection for your home against covered events, perils and certain types of damage and liability. This is a legally binding contract between the policyholder and an insurance company. In exchange for this protection, you'll pay a monthly premium. Often, homeowners insurance is required as part of a mortgage agreement and may be bundled into your monthly mortgage payment.

Best Homeowners Insurance in South Dakota

Average Home Insurance Premium in SD

Average home prices in South Dakota are slightly above national averages, and while home insurance is based on rebuild cost as opposed to market values, market values indicate homes that are less expensive to rebuild.

Average home insurance rates in the Mount Rushmore State are $1,550. Insurance rates are a reflection of risk, both individual and geographic, coupled with insured value, so rates can vary from others in the area.

Finding the Best Premium for Your Home

The average home insurance claim for damage caused by fire or lightning damage is over $44,000. Claims due to wind, hail, or water damage approach averages of $10,000. Homes are at risk in a vast number of ways, and with 1 in 15 insured homeowners placing a claim each year, it’s important to have a home insurance policy that properly protects you from these risks. Finding the best premium is only partly about price. The best premium is a combination comprehensive coverage for your home and personal belongings and a rate that won’t break the budget.

Types of Home Insurance in South Dakota

Of the two types of home insurance most commonly sold in South Dakota, HO-2 and HO-3, HO-3 offers the best protection. Other types of policies exist, but are less common or are designed for specialized types of insurance, like condos or co-ops, or even mobile homes.

An HO-3 policy, also known as an all-risk policy or an open-peril policy, puts fewer restrictions on the type of perils (risks) that are covered by your policy, excluding only a small list of perils from coverage. By contrast, an HO-2 policy only covers 16 named perils — leaving your home uninsured for anything else that might damage the structure or your belongings.

Dwelling coverage

Your home insurance policy has several coverage areas, each with a separate coverage limit and sometimes providing coverage for different sets of perils. The largest amount of your home insurance premium pays toward coverage for the dwelling, which is the house itself, and any attached fixtures. Insurers use specialized software to calculate how much it will cost to rebuild your home with the exact same materials or modern equivalents, including any special features of your home, such as gables or decorator windows.

Most homeowners choose the calculated rebuild cost as the insured amount for their dwelling coverage but some insurers will allow you to choose a lower number. For example, the calculated rebuild cost of your home might be $200,000 but the outstanding mortgage balance is only $100,000. In this case, it might be tempting to ensure the house for $100,000 to lower your premium.

There are two potential problems in choosing an amount lower than the calculated rebuild cost. First, in the event of a total loss, your home is only insured for half the amount it will cost to rebuild it. Secondly, even smaller covered claims, such as roof damage from hail, will be paid on a percentage basis depending on insurance to value, which is only 50 percent in this example.

An $8,000 roof claim would only pay $4,000, less your deductible, which is the part of the claim paid by the insured. This reduced claim payment is called coinsurance, and it’s triggered when insurance to value is less than 80 percent based on the calculated rebuild cost.

The dwelling coverage for your home is replacement cost coverage, meaning you are covered for the actual cost of replacement, subject to your coverage limits and less your deductible. The one exception is your roof, which is often covered for actual cash value (ACV) or by using a depreciation schedule that reduces the insured value of your roof based on age.

Actual cash value adjusts the insured value for wear and tear, much like the comprehensive or collision coverage does on an auto policy. Insurers vary in how they cover roofs, with some insurers being kinder to consumers about roof coverage than others. If you have an older roof or are concerned about roof damage, ask your agent for some examples of how much you would be paid in a claim for your roof.

Other structures on your property, like sheds, fences, or gazebos are covered as well — but coverage for other structures has a separate coverage limit. Usually, this limit is set at a default amount of ten percent of the dwelling coverage. If all you have in your yard is an old, rusty shed, then a lower amount will be sufficient, but if your other structures are more elaborate, you can adjust your coverage amount as needed.

Personal property coverage

All the things inside your home are also covered by a standard home insurance policy, with the exception of vehicles, and with some additional rules that can limit coverage. The first way in which personal property coverage is often limited is by being insured for actual cash value. Most home insurance policies depreciate the insured value for your belongings, unless you choose an endorsement that insures personal property to replacement cost. Not all insurers make this option available and the topic isn’t always discussed in detail when writing the policy.

If your $1,000 flat screen television is damaged in a covered claim, your insurer will only pay a percentage of the actual cost of replacement, based on the age of the television. For example, the insurer might pay $500. In a larger loss, where several rooms and the contents of those rooms are damaged, the gap in coverage created by actual cash value coverage can easily add up to thousands.

A better option, if available, is coverage for replacement cost value (RCV), which pays for the actual cost of replacement for your damaged items. Some insurers offer this type of coverage as standard with select policies.

Valuables are also frequently limited in coverage, with coverage limits by type and often by item. Jewelry, for example, might have a total coverage limit of $2,500, with a single item limit of $1,000. Similar limits are often applied to other types of valuables, such as coins, furs, firearms, and musical instruments.

The solution to fully insure your valuables is to add them to your policy as scheduled items or to purchase a personal articles policy, both of which can insure your valuable items to their full value. In either case, your insurer will require a recent receipt or a recent appraisal that describes the item and verifies its value. For valuables that appreciate, like jewelry, it’s recommended to submit updated appraisals periodically to be sure you’re fully insured for those items.

Personal liability coverage

Both HO-2 and HO-3 policies, the most common types of home insurance policies, provide coverage for personal liability with minimum coverage limits beginning at $100,000. Dog bites, falling ladders, or common slips or falls can all lead to personal liability and even lawsuits. If you are sued due to a covered claim for personal liability, your coverage can pay toward you legal defense, often a significant expense in itself.

Dog bites, among the most common cause of personal liability claims, result in an average settlement of over $32,000 — and some claims are for several times the average settlement amount. In addition to medical liability, which pays for injuries to others, your liability coverage also covers related costs to others, such as lost wages and pain and suffering. It’s easy to see how a claim total can begin to add up.

Fortunately, increasing personal liability coverage limits is among the least expensive upgrades you can make to your homeowners insurance policy. Raising your coverage limit from the base coverage limit of $100,000 to $300,000 in coverage usually cost about $20 per year.

Your personal liability coverage covers you even when you’re away from home — but not for automobile accidents or injuries caused by any other type of vehicle.

Personal liability can be the result of injuries to others, but can also be the result of damage to the property of others. For example, if your lawnmower rolls down the hill and bumps into your neighbor’s car, the damage to your neighbor’s car can be claimed on your home insurance policy. However, many homeowners avoid smaller claims, knowing that a claim of any size could affect home insurance rates and jeopardize claims free discounts.

Medical payments coverage

A standard home insurance policy also has medical payments coverage, which provides for the medical payments for injuries to others in the event of smaller injuries where there is no lawsuit. The standard coverage amount is $1,000 with an option of $5,000 in coverage. With the average claim for medical payments at around $3,000, the $5,000 option provides better protection and is affordably priced at less than $10 per year.

Deductibles

Deductibles are the part of the insurance claim paid by the insured and they play an integral role in your insurance policy and premium. Deductibles keep your premium lower. Choosing a higher deductible directly affects your premium because the insurer has less risk; claims smaller than the deductible amount will not be paid, so rates are lower.

However, because the deductible will be subtracted from your claim payment, it’s important to choose a manageable amount. Imagine a roof claim, which is probably paid at actual cash value (depreciated due to age) combined with a high deductible. If the damage requires a new roof or extensive repairs, you could easily find yourself responsible for all or most of the cost. Some homeowners are comfortable with assuming more risk for lower premiums. For other households, an unexpected expense of thousands of dollars could break the bank.

Some coverages may be assigned a percentage-based deductible, which is a percentage of the total dwelling coverage. A home insured for $200,000 with a two percent deductible makes the insured homeowner responsible for the first $4,000 toward the claim. Standard deductibles for other coverages or when a percentage-based deductible is not required start at a minimum of $500 to $1,000.

Discounts

Insurers track trends both for determining risk and for growing or keeping their customer base. Customers who have multiple policies with the same insurer tend to stay with that insurer longer, which leads insurers to incentivize multiple policies. The multi policy discount is the most common discount offered and often among the largest when you consider overall savings.

Unlike other discounts that only affect your home insurance premium, like discounts for home safety features, a multi policy discount usually reduces the cost of all or most of the bundled policies. Bundling discounts on auto tend to be in the five percent range, but the home insurance discount can be as high as 30 percent. Even at a five percent discount on auto, the savings can really add up, particularly for families with multiple drivers.

Common home insurance discounts:

• Multi policy discounts
• Discounts for affinity groups or government employees
• Home safety features
• Homes with green technology
• Hail or wind resistant roofs
• Claims-free discounts
• Length of insurance coverage with prior carrier
• New home buyer discounts
• Senior discounts
• Pay in full or autopay discounts
• Loyalty discounts

Ask your insurer for a list of available discounts. You may qualify for one or more and the savings from multiple discounts can add up quickly

Inclement Weather in South Dakota

From blizzards to heat waves to tornadoes, South Dakota has it all when it comes to weather — but the big events aren’t as common. Instead of F5 tornadoes, the Mount Rushmore State is more likely to experience heavy thunderstorms with hail, lightning, and flooding. Single storm snowfall totals ranging from several inches to two feet also aren’t uncommon.

Wind, hail, rain, cold, snow, and ice can all damage a home. Average temperatures have plummeted to below zero for a week at a time, with wind chills of 80 degrees below zero. Sustained temperatures that low can freeze and burst pipes and clog gutters and drainage with thick ice. Winter months are particularly challenging as snow and ice thaw, sometimes combined with rain, can lead to flooding. Recent years have seen dozens of areas in South Dakota submerged by flood waters.

Heavy rains also form sinkholes in the state, the kind big enough to swallow cars, roadways, homes, and cows — and yes, that really has happened.

Two common risks in particular, land movement and flooding, aren’t covered by a standard home insurance policy. Some insurers provide an option to add coverage for land movement to a standard home insurance policy.

Flood Insurance in South Dakota

Unlike coverage for land movement, which can sometimes be added to an existing policy, coverage for floods will require a separate flood insurance policy. Common household mishaps, like accidental tub overflows or burst pipes, are covered by your home insurance policy — but if the water touched the ground before entering your home, that’s a flood — and that’s where flood insurance can provide coverage.

Flood insurance rates are determined by risk, indicated by the FEMA flood zone assigned to the property. Premiums are also affected by the insured amount and by your deductible. A higher deductible will lower the cost of your flood insurance policy but also create more financial risk if you have a claim because the deductible is the part of the claim that you pay.

Most insurance agencies can quote and bind coverage for flood insurance. Expect rates to vary, depending upon risk and insured value, and range from a few hundred dollars per year up to a few thousand dollars annually. Coverage is available for the building structure and its contents, subject to coverage limits, but vehicles and belongings stored in basements or outdoors won’t be covered by your home’s flood insurance policy.

Most Affordable Cities

Home insurance rates are individualized, meaning that your rates can be affected by your individual claims history, credit, driving history, prior insurance history, and many other factors. As a result, your neighbor who lives in a similar home to yours, may have higher or lower home insurance rates.

Average rates for a given area, however, are driven by the combination of risks that are unique to that area as well as the average rebuild cost of homes in that area. Areas with larger homes or more remote homes typically have higher average rebuild costs.

On a local level, risks such as wildfires, distance from a fire station, proximity to water, and even crime rates can drive average premiums higher, or reduce average premiums in areas with less overall risk of claims.

Some of the most affordable cities for South Dakota home insurance include:

• Sioux Falls
• Furon
• Vermillion
• Aberdeen
• Brandon

Most Expensive Cities

Among some of the more expensive cities for South Dakota home insurance are:

• Sturgis
• Belle Fourche
• Hot Springs
• Spearfish
• Redfield

Top South Dakota Home Insurance Providers

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1. Progressive

Progressive markets its Progressive Home Advantage policies as a cost-effective way to insure your home, with additional savings available for bundling your home and auto insurance with Progressive.

The company is well known in the industry for its attractive auto insurance rates or for underwriting drivers that have a less-than-perfect driving history, making Progressive a good choice for families who want to bundle home and auto but have younger drivers or drivers with blemished driving records.

Progressive sells its policies online or through a wide network of independent agents. Guaranteed replacement cost coverage is available as well as a policy feature that automatically adjusts coverage limits to account for inflation.

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• First time policyholders

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2. Amica

While not as well-known as some other insurers, Amica consistently tops the charts on customer satisfaction surveys measuring overall satisfaction for customer service and claims.

This includes being named “Highest in customer satisfaction among national insurers” for a stunning 16 years in a row by JD Power.

Amica’s platinum choice home insurance policy provides coverage for all risks (except those specifically excluded) for both dwelling and personal property coverage, as well as making replacement cost coverage for personal property standard.

Amica’s platinum choice home insurance policy provides better coverage, than most other policies you’re likely to find. Available discounts include multi policy discounts, a claims free discount, and a loyalty discount.

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• Customers who have existing policies with State Farm

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3. State Farm

State Farm recognizes the importance of having a local agent who can help you understand your coverages, uncover additional discounts, and handle any service needs that may arise. The trend for many insurers has been to move customer service online and to call centers.

While these conveniences are also available through State Farm, the company’s network of 18,000 knowledgeable agents assures customers that personalized service is always within reach.

Valuables can be insured using a personal articles policy independent of your home insurance policy, allowing more flexibility in how you manage coverage limits and deductibles. Multi policy discounts are available and discounts for home safety features and for staying claims free help to make policies more affordable.

Best For

• Diminishing Deductible Option

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4. American Family

Sold in select states during network of independent insurance agents, American Family Insurance focuses on the areas where its products match perfectly with the broad needs of its customers.

From home insurance and auto insurance to farm and ranch insurance — or even business, life, or health insurance, American Family has you covered.

Available add-ons such as coverage for home-based businesses help to prevent risky gaps in coverage that can lead to uncovered claims. Discounts are available for bundling home and auto, and American Family also offers discounts for newer homes and for customer loyalty.

Final Thoughts

Once you purchase a homeowners insurance policy, it’s likely that you’ll have that policy for years to come. One in 15 households places a home insurance claim each year, so if you have your policy long enough, at some point it will probably be tested with a claim.

An insurance policy is a contract and insurers won’t provide coverage for risks that aren’t covered in the contract or cover claims for more than the guidelines stated in the contract. It’s up to the consumer to find a policy that truly meets their needs if there is a claim.

At some point during your home insurance buying journey, make some time to meet with an agent in person to discuss your needs. Even if you don’t ultimately buy a policy from that agent, the conversation will be enlightening and can shine a light on hidden risks or gaps in coverage. Bring a list of questions with you.

Finding the best premium for your South Dakota home really means finding the best coverage for your home and your family — without costly coverage gaps — combined with a price that provides value you can afford.

Frequently Asked Questions