South Dakota Auto Insurance Requirements

South Dakota law requires all motor vehicle owners to maintain auto insurance that meets minimum coverage standards. Understanding these requirements is essential for producers selling auto insurance in the state.

Minimum Liability Coverage: 25/50/25

South Dakota requires minimum liability limits commonly expressed as 25/50/25:

Understanding the Numbers

25/50/25 Explained:

• $25,000: Maximum paid for injuries to any one person in an accident
• $50,000: Maximum paid for all injuries in one accident (even if multiple people injured)
• $25,000: Maximum paid for property damage in one accident

Example Scenario: Driver causes accident injuring three people:

• Person A injuries: $35,000
• Person B injuries: $20,000
• Person C injuries: $15,000
• Total: $70,000

With 25/50/25 coverage:

• Person A receives $25,000 (per-person limit)
• Person B receives $20,000 (under per-person limit)
• Person C receives $5,000 (per-accident limit reached: $25,000 + $20,000 + $5,000 = $50,000)
• Driver personally liable for remaining $20,000

Exam Tip: The per-accident limit ($50,000) is the maximum paid to all injured parties combined, even though the per-person limit is $25,000. The per-accident limit operates as a cap on total bodily injury liability.

Why Minimum Limits May Be Inadequate

Medical Costs Exceed Minimums:

• Emergency room visit: $1,500 - $5,000
• Ambulance: $500 - $2,000
• Hospital stay (one day): $3,000 - $10,000
• Surgery: $10,000 - $50,000+
• Rehabilitation: $5,000 - $20,000

One serious injury easily exceeds $25,000

Property Damage Exceeds Minimums:

• Average new car: $30,000 - $50,000
• Luxury vehicles: $60,000 - $100,000+
• Multiple vehicles in accident
• Building or structure damage
• Cargo and contents

$25,000 property damage limit often insufficient

Recommended Coverage: Most insurance professionals recommend 100/300/100 or higher:

• $100,000 per person bodily injury
• $300,000 per accident bodily injury
• $100,000 property damage

Mandatory Uninsured/Underinsured Motorist Coverage

UM/UIM Requirement

South Dakota requires uninsured motorist (UM) and underinsured motorist (UIM) coverage:

Critical Distinction: Unlike many states where UM/UIM is optional, South Dakota requires UM/UIM coverage. This protects policyholders when hit by uninsured or underinsured drivers.

What Uninsured Motorist Coverage Provides

Covers You When:

• Hit by driver with no insurance
• Hit by unidentified hit-and-run driver
• Hit by driver whose insurer denies coverage
• Hit by driver whose insurer becomes insolvent

Pays For:

• Medical expenses from injuries
• Lost wages and income
• Pain and suffering
• Other damages from bodily injury
• Property damage (if included)

What Underinsured Motorist Coverage Provides

Covers You When:

• At-fault driver has insurance
• But their limits insufficient to cover your damages
• You have higher UM/UIM limits than at-fault driver's liability limits

How It Works:

Example:

• Your UM/UIM limits: 100/300
• At-fault driver's liability limits: 25/50
• Your medical bills and damages: $75,000

Settlement:

1. At-fault driver's insurer pays their limit: $25,000
2. Your UIM coverage pays additional: $50,000 ($75,000 - $25,000)
3. Total recovery: $75,000

UM/UIM Must Equal Liability Limits

General Rule:

• UM/UIM limits typically match liability limits
• If you carry 100/300 liability, UM/UIM is also 100/300
• Cannot waive UM/UIM (mandatory in SD)
• Can select lower UM/UIM than liability in some cases (check with insurer)

Exam Tip: South Dakota REQUIRES UM/UIM coverage at minimum 25/50 limits. This cannot be waived. Many states allow waiver, but SD does not.

Proof of Insurance

Carrying Proof

South Dakota law requires:

• Carry insurance ID card (paper or electronic) at all times when driving
• Show to law enforcement upon request
• Electronic proof accepted - can display on smartphone
• Provide to other party after accident

Insurance Identification Card

Must include:

• Policyholder name
• Policy number
• Insurer name and contact
• Effective dates of coverage
• Vehicle(s) covered
• Coverage limits (often shown as 25/50/25)

Penalties for No Proof

First Offense:

• Fine up to $100
• May need to provide proof later to avoid penalties

Actual Lack of Insurance:

• See penalties section below

Verification System

South Dakota uses electronic insurance verification:

• Law enforcement can verify coverage electronically
• DMV maintains insurance database
• Insurers report policy information
• Helps identify uninsured motorists

Penalties for No Insurance

Driving Without Insurance

First Offense:

• Fine: $100 minimum
• License suspension possible
• SR-22 requirement

Subsequent Offenses:

• Higher fines (up to $500)
• License suspension: 30 days to 1 year
• SR-22 requirement for 2 years
• Vehicle registration suspension

SR-22 Certificate

What It Is:

• Certificate of financial responsibility
• Filed by insurer with DMV
• Proves you carry required insurance
• Required after certain violations

Who Needs SR-22:

• Convicted of driving without insurance
• DUI/DWI conviction
• Multiple traffic violations
• License suspension for other reasons

Duration:

• Typically required for 2-3 years
• Must maintain continuous coverage
• Lapse in coverage reported to DMV → immediate suspension
• Higher insurance premiums

Cost:

• Filing fee: typically $25-50
• Insurance premium increase: 50-100%+ due to high-risk status

After Accident Without Insurance

Financial Responsibility:

• Must prove financial responsibility for accident
• Post bond or deposit with DMV
• License suspended until resolved
• Vehicle registration suspended

South Dakota Tort System

At-Fault (Tort) System

South Dakota follows an at-fault system:

How It Works:

1. Fault determined after accident
2. At-fault driver liable for damages
3. Injured party claims against at-fault driver's insurance
4. At-fault driver's liability insurance pays damages

vs. No-Fault Systems:

• No-fault: Each driver's insurance pays their own damages
• Tort: At-fault driver responsible for all damages
• South Dakota uses tort system

Comparative Fault

South Dakota applies modified comparative fault (50% bar rule):

Rule:

• Plaintiff can recover if less than 50% at fault
• Recovery reduced by plaintiff's percentage of fault
• If plaintiff 50% or more at fault: NO RECOVERY

Example 1:

• Your damages: $100,000
• You are 30% at fault, other driver 70% at fault
• Recovery: $100,000 × 70% = $70,000

Example 2:

• Your damages: $100,000
• You are 50% at fault, other driver 50% at fault
• Recovery: $0 (50% bar rule - cannot recover if 50% or more at fault)

Example 3:

• Your damages: $100,000
• You are 10% at fault, other driver 90% at fault
• Recovery: $100,000 × 90% = $90,000

Exam Tip: South Dakota uses modified comparative fault with a 50% bar. If you're 50% or more at fault, you recover NOTHING. If you're less than 50% at fault, you recover damages reduced by your percentage of fault.

Personal Auto Policy (PAP) Coverage

Part A - Liability Coverage

Covers:

• Bodily injury to others
• Property damage to others' property
• Legal defense costs (unlimited, in addition to limits)
• Bail bonds (up to $250)
• Settlement costs

Who's Covered:

• Named insured
• Spouse if resident of household
• Family members (residents of household)
• Anyone using covered auto with permission

Where Covered:

• United States
• Canada
• Puerto Rico
• Worldwide for military personnel

Part B - Medical Payments Coverage

Optional Coverage:

• Pays medical expenses for insured persons
• No-fault coverage (pays regardless of fault)
• Covers injuries from auto accidents

Typical Limits: $1,000 - $10,000 per person

Covers:

• Medical and surgical expenses
• Dental expenses
• Ambulance and hospital
• Professional nursing
• Funeral expenses

Who's Covered:

• Named insured and family members (in any auto or as pedestrian)
• Passengers in covered auto

Time Limit: Expenses incurred within 3 years of accident

Part C - Uninsured Motorists Coverage

Mandatory in South Dakota (as discussed above)

Minimum: 25/50

Covers:

• Bodily injury from uninsured motorist
• Hit-and-run accidents
• Insurer insolvency

Part D - Physical Damage Coverage

Two Main Coverages:

Collision Coverage

Covers:

• Damage to covered auto from collision
• Single-vehicle accidents (hit tree, guardrail)
• Collision with another vehicle
• Vehicle rollover

Deductible: Typically $250, $500, $1,000

Comprehensive (Other Than Collision) Coverage

Covers:

• Theft and larceny
• Fire and explosion
• Windstorm and hail
• Flood
• Vandalism and malicious mischief
• Falling objects
• Glass breakage
• Collision with animal (deer, etc.)
• Riot and civil commotion

Deductible: Typically $100, $250, $500, $1,000

Exam Tip: Collision covers hitting another object or vehicle. Comprehensive covers almost everything else (theft, fire, weather, animals, vandalism). Remember: Hitting a deer is comprehensive, not collision.

South Dakota Considerations for Physical Damage

Hail Damage:

• South Dakota ranks among highest states for hail claims
• Comprehensive coverage pays for hail damage
• Deductible applies
• May total vehicle if damage exceeds value

Animal Collisions:

• Deer and wildlife collisions common
• Covered under comprehensive (not collision)
• Deductible applies

Winter Damage:

• Ice damage to windshield (comprehensive)
• Sliding into ditch (collision)
• Vehicle theft in winter (comprehensive)

Commercial Auto Insurance

Business Auto Coverage Form

Purpose: Cover vehicles used for business

Covered Autos Designation:

Who Needs Commercial Auto

Businesses That Need It:

• Delivery services
• Contractors with work vehicles
• Sales representatives using vehicles
• Limousine and taxi services
• Trucking companies
• Any business owning or using vehicles

Commercial vs. Personal Auto

Hired and Non-Owned Auto Liability

Hired Auto:

• Vehicles rented or leased by business
• Short-term or long-term rental
• Coverage applies while hired

Non-Owned Auto:

• Employee personal vehicles used for business
• Provides excess coverage over employee's personal policy
• Protects employer from liability

Why Important:

• Employee uses personal car for business errand
• Employee causes accident
• Injured party sues both employee and employer
• Non-owned auto coverage protects employer

Additional Auto Coverages

Rental Reimbursement

Pays for:

• Rental car while covered auto being repaired
• Typically $20-$50 per day
• Maximum 30 days

When It Applies:

• Collision or comprehensive loss
• Vehicle in shop for covered loss

Towing and Labor

Pays for:

• Towing after breakdown or accident
• Roadside assistance
• Labor at breakdown site
• Typically $50-$100 per occurrence

Gap Insurance

Purpose:

• Pay difference between vehicle value and loan balance
• Important for new vehicles that depreciate quickly

Example:

• Vehicle loan balance: $25,000
• Vehicle actual cash value: $20,000
• Gap coverage pays: $5,000 difference

Who Needs It:

• New car buyers with small down payment
• Long-term loans (60+ months)
• Vehicles that depreciate quickly

Umbrella/Excess Liability

Purpose:

• Provides additional liability coverage above underlying auto policy
• Typical limits: $1 million - $5 million

Coverage:

• Excess over auto liability limits
• May provide broader coverage than underlying policy
• Requires minimum underlying limits (often 250/500)

Example:

• Auto liability limits: 100/300
• Umbrella limit: $1 million
• Lawsuit settlement: $500,000
• Auto policy pays: $300,000
• Umbrella pays: $200,000

Summary: South Dakota Auto Insurance

Required Coverage: ✓ Liability: 25/50/25 minimum ✓ UM/UIM: 25/50 minimum (mandatory - cannot waive) ✓ Proof of insurance: carry ID card at all times

Tort System: ✓ At-fault driver liable for damages ✓ Modified comparative fault (50% bar rule) ✓ Fault determination critical

Penalties for No Insurance: ✓ Fines: $100 - $500+ ✓ License suspension ✓ SR-22 requirement for 2+ years ✓ Higher insurance premiums

Optional Coverage: ✓ Medical payments (no-fault) ✓ Collision (vehicle damage from collision) ✓ Comprehensive (theft, fire, weather, animals) ✓ Rental reimbursement and towing

South Dakota Considerations: ✓ Severe weather exposure (hail, winter storms) ✓ Animal collisions common (deer, wildlife) ✓ Recommend higher than minimum limits ✓ Comprehensive coverage important for hail/weather damage