South Dakota business insurance requirements

South Dakota is one of the few states without a general workers' compensation mandate. The state's own labor department puts it plainly: "There is no law in South Dakota requiring any employer to carry workers' compensation insurance." Going without is still a bad bet, because an uninsured employer loses the protection of the Act and can be sued in court, or made to pay doubled comp benefits. South Dakota has no state disability or paid leave program, auto minimums are 25/50/25, and its slight/gross negligence rule bars more plaintiffs than the 50% and 51% rules most states use.

Workers' compensation requirements

The statute is written as if coverage were required: every employer and employee is "presumed to have accepted" the Act (SDCL 62-3-3), and an employer under the Act "shall secure the payment of compensation" by insuring with an authorized carrier or qualifying to self-insure (62-5-1). The teeth are different from other states, though. An employer that does not do so is "deemed to have elected not to operate" under the Act (62-5-7). No fine or jail term follows. Instead, the injured employee chooses between suing the employer for damages in an ordinary lawsuit and claiming benefits in circuit court under the Act, where the employer owes medical benefits plus twice the other compensation the Act allows (62-3-11). The Department of Labor and Regulation says coverage is not legally required but "highly recommended."

The Act does not apply to farm or agricultural laborers, or to domestic servants unless they work more than 20 hours a week for more than six weeks in any 13-week period (62-3-15). An executive officer can reject coverage by serving written notice on the corporation at election or more than 30 days before an injury (62-3-5.1). Owners who work in the business can buy coverage for themselves on the business's policy, with a stated wage added to payroll (58-20-3). See can owners and officers exclude themselves from workers' comp?.

In practice, buying a policy is the safer course. A tort suit without the exclusive-remedy shield exposes the business to pain-and-suffering damages, and contracts, general contractors and lenders routinely demand a certificate of insurance showing comp and employers' liability. Contractors also answer for their subs: a principal, intermediate or subcontractor is liable for comp to an injured employee of a sub working on the contract, to the same extent as the immediate employer, when the injury happens on premises the principal contractor controls (62-3-10). See managing subcontractor insurance and certificates.

South Dakota has no state fund. Employers buy from carriers authorized in the state or qualify with the department to self-insure, posting security and paying an application fee of up to $2,500 (62-5-5). NCCI files loss costs, and an employer that wants coverage but cannot find a carrier goes to the residual market, which NCCI administers through the National Workers Compensation Reinsurance Association; Technology Insurance (AmTrust) is the 2026 servicing carrier (NCCI administrators; servicing carriers). For background on employers that choose not to insure, the closest comparison is texas nonsubscribers: opting out of workers' comp; see also workers' compensation insurance: how it works.

Disability and paid leave mandates

South Dakota has no state temporary disability insurance program and no paid family and medical leave program. Income replacement during illness or leave is a voluntary benefit, typically group short-term disability. See state disability and paid family leave programs: every mandate in 2026 for employees in other states.

Commercial auto requirements

An owner's liability policy must cover at least $25,000 per person and $50,000 per accident for bodily injury and $25,000 for property damage (SDCL 32-35-70). Those limits apply to business vehicles, but most commercial contracts expect far more. Interstate for-hire carriers need at least $750,000. See commercial auto insurance: what it covers and what it leaves out and FMCSA insurance requirements and filings for motor carriers.

The business insurance market in South Dakota

Severe convective storms, flooding and winter weather drive property losses. FEMA declared major disasters for a June 2025 storm and flooding (DR-4890), straight-line winds on December 17 and 18, 2025 (DR-4903), and storms, tornadoes and flooding in June and early July 2026 (DR-4941, DR-4938). Expect wind and hail deductibles on commercial property; see severe convective storms: hail, tornadoes and rising insured losses. Flood is excluded from standard forms, and NFIP commercial policies top out at $500,000 for the building and $500,000 for contents, with the program authorized only through December 11, 2026 (FEMA).

Surplus lines brokers pay tax on surplus lines premiums at the state premium tax rate, which is 2.5% of premiums for property and casualty insurance, before April 1 each year, or quarterly once their annual remittance tops $5,000 (SDCL 58-32-44; 10-44-2). See surplus lines taxes, stamping fees and diligent search. South Dakota has no FAIR plan; none appears among the plans in the Property Insurance Plans Service Office's member list (PIPSO); property the standard market declines usually goes to the excess and surplus lines market.

Liability law that affects premiums

South Dakota uses a rule few states share. A plaintiff whose own negligence contributed to an injury recovers only if that negligence "was slight in comparison with the negligence of the defendant," and then damages are reduced by the plaintiff's share (SDCL 20-9-2). The jury decides "slight" without being told any percentage of fault. In practice that bars many claims a 50% or 51% state would allow, which helps premises and auto liability for South Dakota businesses. General damages in medical malpractice cases are capped at $500,000 (21-3-11).

Personal injury suits must be filed within three years (15-2-14); contract claims and claims for injury to personal property within six (15-2-13).

Where to get help

• Division of Insurance, Department of Labor and Regulation (dlr.sd.gov/insurance): 605-773-3563. File a complaint online through the division's complaint page.
• Division of Labor and Management (dlr.sd.gov/workers_compensation): 605-773-3681 for workers' comp questions, first report of injury filing and self-insurance.

Confirm your obligations with the department or a licensed broker, and compare states with the workers' comp and benefits requirements by state.