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Homeowners Insurance Premiums in South Dakota

Purchasing your own home, especially if it’s your very first home, can fill you with tons of joy. But all of that happiness does come at a price. In truth, the home buying process is a labor of love; emphasis on “labor”. And purchasing homeowners insurance on your property is just one of many complicated, flaming hoops you’ll have to jump through to make sure your purchase is complete.

Despite its majestic landscapes and low population density, South Dakota has some formidable insurance rates. A big part of that has to do with severe weather, which is common in the great plains of the midwest. Given the average cost of homes in South Dakota, you should expect to purchase the following coverages, especially if you elect to purchase an HO-3 special form policy:

 

Types of Coverage Coverage Amount
Replacement Cost (Dwelling) $200,000
Replacement Cost (Contents) $100,000
Personal Liability $100,000
Medical Expense $1,000
Deductible $1,000 (suggested)

Average home prices in South Dakota range from $180,000 – $200,000. We estimated the data in the chart above erring on the side of caution, since home values don’t appear to be dropping any time soon. Based on a variety of circumstances, your home’s value included, certain residents can expect to pay the following estimated annual premiums:

Average Homeowners Insurance Rates in South Dakota Legend: Average Rate Aberdeen Brookings Rapid City Sioux Falls Watertown 150 300 450 600 750 900 1050 1200 1350 1500 $1389 $1476 $1534 $1336 $1452

 

That being said, shopping around can really help you get a better deal. Different companies will offer to insure your home for different rates, and they can vary by hundreds of dollars from one company to the next. But you’ll never know how much you can save if you don’t ask around!

High & Low Property Insurance Rates in South Dakota Legend: Lowest Estimated Rate Highest Estimated Rate Aberdeen Brookings Rapid City Sioux Falls Watertown 200 400 600 800 1000 1200 1400 1600 1800 2000 $1222 $1833 $1299 $1948 $1350 $2025 $1176 $1764 $1278 $1917

Laws and Requirements

Did you know that there’s no official law that says you have to have homeowners insurance? It’s true. But for the most part, this stems from the fact that mandating homeowners coverage isn’t necessary. Either your mortgage lender will make it a necessary requirement of your loan agreement, or you’ll elect to purchase coverage on your own. After all, who wants to pay $20k for a new roof after a hailstorm, or buy a new home outright if your dwelling gets taken out by a tornado? Buying homeowners insurance just makes the most sense.

Taking a Home Inventory

We can’t stress enough how important it is to take an accurate and thorough home inventory before you start shopping around for quotes. It is very difficult to estimate the total amount of coverage you need to buy, especially in the “Part C” of your form, without a good home inventory. And trust us, you want to make sure you don’t waste money on inflated premiums based on overestimating your coverage needs. You also don’t want to be left with a hefty bill if you choose to purchase too little coverage and end up having to file a massive claim.

Choosing What (and How Much) Coverage

The basic HO-3 policy that many South Dakota home insurance companies offer does not necessarily cover every potential disaster that your home or your property may face. Before you sign the paperwork on your policy, make sure to talk to your insurance agent about:

  • Wind/Hail – In South Dakota, even if your policy covers hail claims at replacement cost on your policy, you won’t get all of the money upfront. You’ll receive the actual cash value of the damage to your home until repairs are complete. If you can’t get the repairs done within 180 days, you will either have to ask your insurer for an extension in a timely manner or risk forfeiting the replacement cost payout on your claim.
  • Tornadoes – South Dakota is on the very northern end of the infamous “Tornado Alley”, so residents of the state are no strangers to severe weather. There are an average of 33 tornadoes per year in South Dakota. Thankfully, both your dwelling and your property will be covered in the event of “windstorm” damage.
  • Floods and Water Damage – Very few water damage claims are ever honored by homeowners insurance companies. If the damage results from something breaking – such as plumbing, heating, or A/C units – you may be covered. Any other natural water damage (floods, rain, etc.) may require extra coverage. If your insurance company won’t let you purchase endorsements for flood and other water damage, you might want to contact the National Flood Insurance Program for more information.
  • Covering Your Property – Unlike Part A coverage for your dwelling, coverage for your personal property is a little more limited. The “named perils” list explicitly says what perils are covered; if you file a claim on damages caused by anything else, you will likely be denied. But you can ask your agent for endorsements or riders to provide you with extra coverage if you wish.
  • Liability Coverage – Are you worried about accidents happening in or around your home? If the accident is deemed to be your fault, then you should be. This is why homeowners insurance policies include liability coverage. This coverage can protect you from expensive costs associated with lawsuits and other damages.
  • Umbrella Coverage – Not every homeowner requires average coverage limits; some lucky individuals may own property which is valued higher than the coverage limits set by their insurance company. But many insurers also offer umbrella insurance – up to millions of dollars in coverage – for such homeowners.

Replacement Cost vs. Actual Cash Value

If these terms haven’t been carefully explained to you, then you’re going to want to pay attention. They both have to do with how much money you will receive in the event that you have to file a claim. Replacement costs yield the largest payouts, because they will cover 100% of how much it costs to replace the damaged property. However, the more replacement cost coverage you have, the more expensive your premiums will be.

Actual cash value coverage will lower your premiums – but only because you are accepting a higher level of financial responsibility in the event of damage. Actual cash value only pays out a percentage of how much it will cost to replace or repair your damaged property because it includes depreciation into the calculation. This means you will be paying more to get things fixed or replaced if your claim is honored.

How Your Credit Score May Influence Your Rate

When you start shopping around for quotes, be sure to ask your agent about how they evaluate your credit history before you start giving them any personal information (such as your social security number). In some states, homeowners insurance companies are only allowed to evaluate a limited amount of your credit history; in other areas, they may be able to look at your entire credit report. Depending on what they look at and how much access they are allowed to have, it can significantly alter your monthly premium.

South Dakota Homeowners Insurance Rates by Credit Score Legend: Median Credit Homeowner Excellent Credit Homeowner Aberdeen Brookings Rapid City Sioux Falls Watertown 150 300 450 600 750 900 1050 1200 1350 1500 $1389 $986 $1476 $1048 $1534 $1089 $1336 $949 $1452 $1031

Learn More

For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner’s insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:

South Dakota Department of Labor & Regulation – Homeowners Insurance

The Official South Dakota State Government Website

National Flood Insurance Program

Or contact them directly through the following resources:

124 S. Euclid Avenue, 2nd Floor
Pierre, SD 57501
Phone: 605.773.3563 (ask for Securities Regulation)
Fax: 605.773.5953

Contact by Email

 

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