South Dakota Homeowners Insurance Guide

Homeowners insurance should be a top priority for anyone who owns a home, including residents of South Dakota.

From tornadoes to snow storms, having homeowners insurance provides a financial safeguard for policyholders if disaster should strike.

What Homeowners Insurance Covers

Homeowners insurance provides financial coverage for structural damage to a policyholder’s home resulting from a variety of catastrophic events. This financial protection also covers costs related to any damage to personal property.

Those catastrophic events covered by standard homeowners insurance include fire; lightening; windstorm, including hurricanes and tornadoes; hail; explosion; riot or civil commotion; smoke; vandalism; falling objects; weight of ice, snow or sleet; and freezing of plumbing, heating, air conditioning or other household systems.

Homeowners insurance also covers personal liability claims against the policyholder if the policyholder or a member of his or her family causes bodily injury or property damage to a third party.

It is important to note that homeowners insurance does not cover all events. It does not cover damages or losses resulting from neglect; intentional loss; earth movement, such as an earthquake; flooding; or acts of war.

Homeowners Insurance Coverage Levels

When shopping for homeowners insurance, consumers should be aware of how much coverage they wish to purchase. The amount of coverage a policyholder purchases will impact his or her insurance rates.

The levels of homeowners insurance coverage fall into one of three categories:

Actual Cash Value: Actual cash value coverage provides enough coverage to replace the policyholder’s home and/or possessions after accounting for depreciation.

Replacement Cost: Replacement cost coverage provides enough coverage to replace the policyholder’s home and/or possessions without accounting for depreciation.

Guaranteed Replacement Cost: Guaranteed replacement cost coverage guarantees coverage for 100 percent of the cost to rebuild the policyholder’s home to its exact condition before the destructive event took place.

Farm and Ranch Insurance Coverage

One of the characteristics for which South Dakota is known is its extensive farm country. In fact, there were approximately 31,300 farms in South Dakota in 2007, according to the U.S. Department of Agriculture.

With so many farms in South Dakota, farm and ranch insurance is probably as important as homeowners insurance. While homeowners insurance covers the policyholder’s primary residence, farm and ranch insurance coverage extends that coverage to the many facets of a working farm.

Most farm and ranch insurance policies will cover one’s home and personal property as well as farm personal property, including livestock, and any farm buildings and structures. Some policies also will cover farm machinery.

Flood Insurance Coverage

As noted, homeowners insurance does not cover damage resulting from flooding. For this reason, homeowners should augment their insurance policies with flood insurance, especial South Dakota residents.

A March 2009 report from the National Weather Service noted that much of South Dakota, specifically along the James River, will be at above-average flood risk this year. The report points out that the melting of heavy winter snowfalls is expected to increase the risk for flooding.

For more information on how to purchase flood insurance, South Dakota residents can contact the SD Office of Emergency Management, which administers the National Flood Insurance Program for South Dakota in partnership with the Federal Emergency Management Agency, better known as FEMA.