Best Small Business Insurance in South Dakota

South Dakota Insurance Requirements

Commercial Auto Insurance

South Dakota law requires operators and owners of motor vehicles to demonstrate “financial responsibility” adequate enough to cover certain specified liability claims. The easiest way to demonstrate financial responsibility is by getting auto insurance. But you may also deposit money—a large sum of $50,000 or more may be required—with the state treasurer or post a surety bond. 

The law prescribes the minimum coverage a policy must have: 

• Bodily injury to or death of one person in any one accident: $25,000
• Bodily injury to or death of two or more persons in any one accident: $50,000
• Damage or destruction of property of others in any one accident: $25,000 

32-35-2: Proof of financial responsibility for the future defined

The term, proof of financial responsibility for the future… means proof of ability to respond in damages for liability, on account of accidents occurring… arising out of the ownership, maintenance, or use of a vehicle… in the amount of twenty-five thousand dollars because of bodily injury to or death of one person in any one accident, and, subject to the limit for one person, in the amount of fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident, and in the amount of twenty-five thousand dollars because of injury to or destruction of property of others in any one accident.

32-35-119: Written evidence of insurance--Electronic copy as written evidence

With respect to persons asserting financial responsibility by means of a certificate of insurance, written evidence… is a copy of the insurance policy.

Together, these two provisions mean that a business that insures its vehicle(s) under an automotive liability policy with 25-50-25 or more coverage will meet its legal obligations.

Workers’ Compensation Insurance

Unlike most other state laws, South Dakota workers’ compensation law does not compel employers to have workers’ compensation insurance. However, the law does make it clear that employers who do not have such insurance may be sued by employees injured on the job. 

Workers’ compensation laws typically prohibit employees from taking legal action in the civil courts against employers for workplace injury, if the employer has workers’ compensation insurance. 

South Dakota’s workers’ comp law provides that employers are strictly responsible for compensating workers who are injured or die due to a workplace accident. 

62-3-1: Measure of responsibility assumed by employer

The compensation provided by this [law] is the measure of responsibility which the employer has assumed for injuries to or death of any employee.

The employer may opt to take out workers’ compensation insurance to ensure funds are available should such a risk materialize.

62-5-2: Obtaining workers' compensation insurance

An employer may secure the payment of compensation to any employee by insuring and keeping insured the payment of the compensation with any stock corporation writing workers' compensation insurance.

An employer without workers’ comp cannot rely on the civil liability protection provided by the law. 

62-5-7: Failure to secure payment as election not to operate under [this law]

Any employer … who has failed to comply with the provisions of [§62-5-2] shall be deemed to have elected not to operate under the provisions of this [law].

This leaves an employer without workers’ comp open to being sued, and the risk of having to pay damages of a large and uncertain amount. 

62-3-11: Election to proceed against employer—Options

Any employee, who is employed by an employer who is deemed not to operate under this [law] in accordance with §62-5-7, or the dependents of such deceased employee, may elect to proceed against the employer in any action at law to recover damages for personal injury or death; or may elect to proceed against the employer in circuit court.

Data Breach Insurance

South Dakota’s data breach notification law only appeared on the statute book in 2018, making the state one of the last to pass such a law. The legislation is modeled after the California law, which most states have followed. It requires a business to notify any resident whose personal information has been or is reasonably suspected to have been acquired by an unauthorized person. Here is the provision in the South Dakota Codified Laws:

Notice of breach of system security

“Following the discovery by or notification to an information holder of a breach of system security an information holder shall disclose… the breach of system security to any resident of this state whose personal or protected information was, or is reasonably believed to have been, acquired by an unauthorized person…”
(SD Codified L § 22-40-20 (2021))

Information Holder

 ““"Information holder," any person or business that conducts business in this state, and that owns or licenses computerized personal or protected information of residents of this state…”
SD Codified L § 22-40-19(3) (2021)

The duty to inform a resident that their personal information has been disclosed without authorization makes a business that has suffered a data breach more likely to face allegations, and perhaps, claims of negligence. Therefore, South Dakota businesses should consider carrying data breach insurance to cover the risk of such a happening.   

South Dakota Insurance Resources

South Dakota Department of Labor and Regulation
South Dakota Workers’ Compensation
South Dakota Division of Business Services

General Liability Insurance

The vast majority of South Dakota companies purchase general liability insurance from an insurance company even though it is not legally required. This type of business liability insurance covers third-party bodily injury, third-party property damage, advertising liability, libel, slander, copyright issue, and other common claims faced by companies across various industries. 

General liability insurance is one of the most important types of business insurance your company can purchase.

Business Owner’s Policy

A business owner’s policy (BOP) is an affordable way to bundle business insurance coverages. This type of policy includes commercial general liability insurance with commercial business property insurance. Many small business owners with a physical business space opt for this coverage.

Commercial Auto Insurance

You need to carry commercial auto insurance if your company uses vehicles to transport people or goods. This type of insurance is very similar to personal auto insurance and covers liability, medical costs, collisions, and uninsured/underinsured motorists. A commercial auto policy also covers vehicles rented or owned by your company and employees who use their own vehicles for company business.

Workers’ Compensation Insurance

South Dakota does not require businesses with employees to carry workers’ compensation insurance. Nevertheless, it’s a good idea to subscribe to such insurance. Taking out workers' compensation insurance puts a limit on the amount and type of compensation that an injured employee may receive. The limits are set by law.

Employee Health/Life/Disability Insurance

Companies that provide health, life, and/or disability insurance as a fringe benefit will need appropriate South Dakota insurance. Under the Affordable Care Act, firms with more than 50 full-time employees must offer health insurance or pay an expensive penalty.

Professional Liability Insurance

Professional liability insurance covers financial risks to attorneys, accountants, and other people who provide professional services or expertise. Professional liability coverage varies depending on the industry but usually includes negligence, legal defense, slander or libel, and copyright and trademark disputes. 

Professional liability insurance includes errors and omissions (E&O) insurance.

Data Breach Insurance

If your company hosts customers’ personal information on its servers and those servers are hacked, lawsuits and damages can result. Data breach insurance protects you in these cases. 

Cyber Liability Insurance

Similar to but more comprehensive than data breach insurance, cyber liability insurance may pay for legal expenses related to a data breach or set up a call center for individuals affected by a breach. It also may pay for active protection against cyberattacks.

Commercial Crime Insurance

Crimes like extortion, forgery, burglary, computer fraud, and embezzlement are covered by commercial crime insurance. Situations in which this type of insurance is particularly useful include dishonest or libelous acts by employees.

Fiduciary Liability Insurance

Fiduciaries, who are legally required to act in plan participants’ best interests rather than the company’s when choosing advisors and investments, should consider this type of insurance coverage. It covers them if they are sued for allegedly providing negligent investment advice or administering plans or benefits incorrectly. 

Third parties like out-of-company consultants and benefit plan administrators are usually not protected.

Directors and Officers Insurance

Any company with directors and officers should consider directors and officers (D&O) insurance coverage, a type of liability insurance that reimburses directors and officers for claims made against them regarding harm allegedly caused by their management decisions.

Executive Risk Coverage

Executive risk insurance is business liability insurance that provides coverage for fraud, D&O, employment practices, initial public offerings, pension funds, extortion, and professional negligence.