Marcia Hultman

Cabinet Secretary

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Division of Insurance - Consumer Information

Automobile Insurance


The Law

South Dakota law requires that any person who licenses and/or operates a motor vehicle must show proof of financial responsibility. Most people comply with this requirement by purchasing automobile insurance.


Topics of Frequent Inquiry

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If you are in an accident and the other driver is at fault, the insurer for that driver must gather sufficient evidence to prove you were not in any way responsible for the cause of the accident.

Insurers are not permitted to apply comparative or contributory negligence to your claim simply because you were at the scene of an accident.

If you were partially at fault, the insurance company may, depending on the degree of fault, reduce or deny payment to you.

An insurance company may issue a check in both your name and the name of the body shop only if you do not object to them doing so. If you do object, the insurance company must make the check payable only to you. However, if a lien is recorded on the vehicle, the insurance company must make a check payable to you and the bank or entity that holds the lien. This protects the interest that the bank or entity has with regard to the lien.

NAIC offers a downloadable accident checklist and tips for staying calm, safe and smart in the event an accident.

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A notice of cancellation of auto insurance must be mailed or delivered to the named insured at least twenty days before the effective date of cancellation. An automobile policy that has been in effect for less than sixty (60) days may be canceled for any reason if the notice is given before sixty days from the policy effective date has elapsed. This does not apply to a renewal of an automobile policy.

After the automobile policy has been in effect for sixty (60) days, a notice of cancellation can only be based on nonpayment of premium, suspension or revocation of a driver license or motor vehicle registration of the name insured or any other operator who either resides in the household or operates an automobile insured under the policy, or noncompliance with the 24/7 sobriety program.

If you are unable to find an insurance company to accept you and provide automobile policy coverage, your local insurance agent can submit an application to the South Dakota Automobile Plan on your behalf.

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Claims Process

Filing an insurance claim can be one of the most frustrating processes, especially after an accident. See helpful hints on how to make the claims process easier here.

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Credit Insurance

Credit insurance may be offered when obtaining a loan but is not required. In some instances, your creditor may require to have some form of life or health insurance to cover the risk of the loan. This requirement can normally be satisfied through existing life or health insurance coverage you already have. You can also shop for a decreasing term life insurance policy which can be less expensive than credit insurance.

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There is no state law that requires you to obtain two estimates; however, it is a very common and acceptable practice when seeking to repair vehicle damage. This permits you to compare estimates and have your vehicle repaired at the lowest possible cost.

Competitive body shop estimates reduce insurance claim costs which help in maintaining or reducing auto insurance rates.

You may choose to have your car repaired at the shop with the higher estimate, but you may be required to pay the difference.

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Hail Damage

If your automobile receives hail damage, the insurance company is obligated to repair your automobile to the extent it is returned to the condition it was in prior to the damage.

Paintless dent repair can be appropriate for some damage, but in some cases the damage is too severe for this method of repair and conventional body repair may be necessary.

If paintless dent repair is not available locally and the damage is too sever for this method of repair, the insurance company is obligated to settle your claim based on conventional methods of repair.

Unless the insurance company has some special language in your policy, the amount necessary to repair your car or the value of your car must be paid.

The company can not pay you differently based upon whether you fix the car, unless there is specific language in the policy allowing the company to do so.

When the insurance company totals a vehicle and agrees to pay you for it, the company becomes the owner of the vehicle. If you wish to keep the car, the company will reduce the amount of your check by the salvage value. You do not have to come up with the money to buy the vehicle back. If you do not want to keep the vehicle, you will have to sign the title over to them.

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Mandatory Coverage

Bodily Injury Liability

This coverage protects you against a claim which is made by someone who has been injured in an auto accident for which you are liable.

Example: If you have 25/50/25 liability coverage, the first two-numbers tell you the amount your policy will pay for bodily injury due to an accident. The first '25' means the policy will pay up to $25,000 for any one injured person. The '50' means the most the policy will pay for all persons injured in a single accident is $50,000.

Property Damage Liability

This coverage protects you against a claim for damages to another vehicle or property in an accident for which you are liable.

Using the earlier example, the third number in the 25/50/25 means the maximum amount the policy will pay for property damage in one single accident is $25,000.

Uninsured and Underinsured Motorist Coverage (UM/UMI)

Uninsured motorist coverage is required for all policies. It pays you, resident members of your family and occupants of your auto for personal injuries caused by an uninsured motorist or a hit and run driver. No coverage for damage to your vehicle is provided.

Underinsured motorist coverage is very similar to Uninsured, except that the coverage is for personal injuries caused by a motorist with inadequate insurance. If a motorist has 25/50 coverage and you have 100/300 of underinsured motorist, your insurance will cover you once the medical costs exceed $25,000 (for one person) up to a maximum of $100,000 minus $25,000 of the other person's liability, $75,000 of your uninsured motorist coverage.

These coverage are not "stackable" - if the medical bills exceed $100,000 in the above example, you cannot add the liable party's $25,000 of the liability coverage and your $100,000 of underinsured coverage.

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Not Filing a Claim

There is no law requiring you to file a claim or report a possible loss to your insurance company. However, your policy contract between you and the insurance company outlines your responsibilities in the event of accident or loss.

The insurance company has no obligation to provide coverage if you fail to comply with the duties, which includes notifying the company promptly of any accident or loss and cooperating with the investigation of any claim or suit.

Insurance companies will periodically check a driver's record which would list all accidents reported.

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Paintless Dent Repair

Paintless dent repair can be appropriate for some damage, but in some cases the damage is too severe for this method of repair and conventional body repair may be necessary.

If paintless dent repair is not available locally and the damage is too sever for this method of repair, the insurance company is obligated to settle your claim based on conventional methods of repair.

Unless the insurance company has some special language in your policy, the amount necessary to repair your car or the value of your car must be paid.

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Personal Auto Policy vs. Commercial Policy

A personal vehicle used for business may not have coverage under a personal auto policy. This type of policy generally provides coverage for personal auto use and will exclude coverage to carry persons or property for compensation or a fee. Some personal auto policies may also state they will not provide coverage if the personal vehicle is used for retail or wholesale delivery, which may include delivery of magazines or newspapers.

Contact your local agent to determine if the existing policy provides coverage for any incidental business use.

A commercial auto policy will provide coverage to protect you and your business if the vehicle is used primarily for business purposes.

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Rock Chips

If it appears a gravel truck was overloaded and the truck driver was negligent in not preventing the loss of gravel, the driver may be liable for your loss.

On the other hand if a rock flies up from the roadbed and causes damage to your car, that driver may not be held liable as there was no negligence on his/her part.

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SR 22 Financial Responsibility Form

State law requires that the financial responsibility form reflect all vehicles that are registered in the name of the person required to file proof of financial responsibility.

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Seasonal Insurance

Some policies, especially those which cover seasonal vehicles, often have a provision in the policy which provides for no refund of premiums regardless of when the policy is canceled. Therefore, depending on the language of your policy you may not have any refund coming.

Examples of seasonal vehicles include, but are not limited to, jet skis, boats and snowmobiles.

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Substitute Vehicles

An auto policy will cover a substitute or temporary vehicle when your insured vehicle is out of normal use due to breakdown, repair, servicing, loss or destruction. An automobile policy will not cover any vehicle other than "your covered auto," which is owned by you or any "family member" and has been furnished or available for your regular use. The auto policy will define "your covered auto" and "family member."

Review the auto policy language to determine what would be covered or excluded from your insurance policy.

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Almost all auto and homeowner policies exclude coverage for any losses of audio or media equipment and their accessories that can be used in an automobile. Some insurance companies will provide coverage for these items for an additional premium. Your local agent would be able to provide information on this additional coverage.

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Total Loss

An automobile insurance policy is not a replacement policy. The value of a vehicle declared a total loss is based on the actual cash value of the vehicle.

Actual cash value is determined by the market value of the vehicle on the day of the accident.

If you disagree with their offer, you may wish to do your own market survey, and, if the amounts are drastically different, you should be able to negotiate with the adjuster.

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Types of Coverage

Medical Payments
This coverage will pay for necessary medical and funeral expenses due to bodily injury caused by an accident, regardless of who is at fault. It will cover you or any family member (as defined in the policy) while occupying a motor vehicle or as a pedestrian when struck by a motor vehicle. The coverage will also include any other person occupying the covered vehicle.

The maximum limit of liability for each person injured in any one accident must be shown in the policy declarations for coverage.

Collision coverage pays for damage to the covered auto caused by upset or impact with another vehicle or object.

This coverage pays for damage to the covered auto caused by something other than collision. Loss caused by the following is considered other than collision:

  • Missiles or falling objects;
  • Fire;
  • Theft or larceny;
  • Explosion or earthquake;
  • Windstorm;
  • Hail, water or flood;
  • Malicious mischief or vandalism;
  • Riot or civil commotion;
  • Contact with bird or animal; or
  • Breakage of glass
Other Options
  • Towing and Labor Costs
  • Rental Reimbursement
  • Accidental Death or Accidental Death Benefits
  • Auto Disability

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Contact the Division of Insurance