Best homeowners insurance in South Dakota of 2023

Best home insurance companies in South Dakota

After comparing and analyzing quoted annual premium data and third-party agency ratings from AM Best, J.D. Power and Standard and Poor’s (S&P), Bankrate found USAA, State Farm, Erie, Auto-Owners and Allstate to offer the best South Dakota homeowners insurance.

Our Bankrate Score is calculated on a 5.0 scale and is based on industry-standard third-party rankings, state availability and digital accessibility. Metrics for customer satisfaction, financial stability, pricing and available features are weighed to create the Bankrate Score. This Score helps provide an easier comparison when shopping for the best South Dakota home insurance company.

Although USAA received the highest scores in the 2021 J.D. Power Home Insurance Study, it is considered rank-ineligible because membership is restricted to current and retired military members and their families. However, USAA has the highest Bankrate Score and an average annual premium about $1,000 less than the average for the state. The company offers policies oriented towards the military lifestyle, with standard home insurance coverages and optional add-ons, like home-sharing and earthquake coverage.

Learn more: USAA Insurance review

State Farm

Although State Farm has the highest average home insurance premium in South Dakota, it is ranked highly in the 2021 J.D. Power Home Insurance Study, taking fourth place. The company has our second-highest Bankrate Score among South Dakota home insurers, which reflects a combination of strong financials and above-average customer experience scores. State Farm also allows you to select more specific financial protection for things like business property, firearms, watercraft, silverware and coin collections.

Learn more: State Farm Insurance review

Erie

Erie is ranked just above State Farm in the J.D. Power study — although the company scores are the same — and has the cheapest average annual homeowners insurance premiums in South Dakota on our list. Erie’s high Bankrate Score is an indication that this company also has a history of strong customer satisfaction and high financial strength ratings. Erie offers guaranteed replacement cost value on dwelling coverage and optional endorsements for water backup, identity theft recovery and service line protection.

Learn more: Erie Insurance review

Auto-Owners

Auto-Owners is a smaller insurer, offering insurance through independent agents in just 26 states, including South Dakota. However, it ranks well alongside some of the largest insurers in the nation, receiving high scores from J.D. Power for customer satisfaction, as well as the highest financial strength rating from AM Best, A++ (Superior). Auto-Owners allows homeowners to include add-on coverage to round out their financial protection, such as the homeowners plus package, equipment breakdown and special personal property coverage.

Learn more: Auto-Owners Insurance review

Allstate

While Allstate earned the lowest J.D. Power score on our list, it still ranked above-average. Additionally, Allstate has the second-lowest South Dakota home insurance premium, on average, making it a good choice to consider for the cost-conscious homeowner. The insurer sells policies through independent agents and captive agents, who are well-versed in Allstate policies and who live in the same communities as the policyholders they serve. Local Allstate agents are likely to be familiar with the specific types of coverage that matter most to South Dakota homeowners, like sports equipment coverage and green improvement reimbursement.

Learn more: Allstate Insurance review

How much is homeowners insurance in South Dakota?

The average annual cost of homeowners insurance in South Dakota is $2,126 for $250,000 in dwelling coverage, according to 2022 rate data from Quadrant Information Services. This is well above the national average cost of $1,393 per year for the same coverage amount. It is also above the average cost of its neighboring states – Minnesota, at $1,877 per year, and North Dakota, at $1,898 per year.

There are several community factors that go into South Dakota homeowners insurance companies’ rates. The cost of labor and materials in the area can contribute to premiums, as well as local weather hazards. South Dakota is in Tornado Alley and susceptible to severe thunder and lightning storms, which can lead to more costly claims, driving up insurance costs as a result.

Home insurance in South Dakota

Knowing the common causes of loss in South Dakota can help you decide which types of coverage are important and when things like guaranteed replacement cost may be worth adding to your policy.

Common causes of loss in South Dakota

South Dakota residents are no stranger to tornadoes, which can cause extensive damage and even completely level a house. Severe storms are another factor South Dakota homeowners have to consider, as they can cause electrical surges or damage to the roof and surrounding trees. Winter storms are also an insurance risk, as heavy snow or ice can cause extensive damage to your home’s exterior, interior or foundation. Here are a few examples of how these risks have plagued South Dakota homeowners:

• Tornadoes: A major tornado in 2019 caused extensive property damage and power outages to much of Sioux Falls. Another tornado hit in May 2020, categorized as an EF5, which destroyed an entire town and resulted in the loss of nearly 50 lives. Sweeping power outages can cause food spoilage and make it dangerous to stay in your home during the winter months, sometimes requiring homeowners to stay elsewhere until the power has returned and damage is fixed. Depending on the coverage in your policy, some of these costs may be mitigated with insurance.
• Thunder and lightning: One of the most expensive causes of loss for South Dakota homeowners is lighting, which results in around $10.8 million in property loss each year. Lighting can take down trees, which can create fires or fall on your home, causing extensive damage. It can also create power surges inside the home, rendering expensive personal property damaged or needing to be replaced.
• Winter storms: South Dakota residents deal with cold, harsh winters each year. The state spends about $8.5 million each year on repairing property damage from winter storms. Snow and ice can create ice dams, which can damage the home’s exterior and interior. The weight of excessive snow and ice can also fracture the foundation or cause the roof to cave in. For these risks, having the right coverage in place is essential for adequate financial protection. A licensed agent can advise you which coverage types or limits are best for your situation.

Home insurance coverage options in South Dakota

Based on the common cause of losses in South Dakota, homeowners can increase standard coverage limits or opt for optional add-on features to better protect them from the damage the elements cause. You may want to consider these coverage options when shopping for South Dakota homeowners insurance:

• Food spoilage: Most standard home policies provide up to $500 in food spoilage if a covered claim causes a power outage. With some companies, like Auto-Owners, you can increase that coverage to higher limits. By increasing food spoilage coverage, you could stock your fridge and freezer without worrying about being out-of-pocket for the overage if the power goes out for an extended time.
• Equipment breakdown coverage: When a power surge happens because of a covered peril, such as lightning, it can fry your appliances and other personal property. Coverage varies by carrier and is subject to property coverage limits. Equipment breakdown coverage could expand this coverage, ensuring you can replace or repair appliances if needed after a covered loss. Auto-Owners, Erie and State Farm offer this optional feature as an add-on to home insurance.
• Guaranteed replacement cost: Most South Dakota homeowners insurance companies offer extended replacement cost coverage, but not all offer guaranteed replacement cost coverage. Extended coverage usually offers a percentage over your dwelling coverage, typically around 25%. But with guaranteed replacement cost coverage, if your entire home needs to be rebuilt from a winter storm, lightning strike or tornado, the cost to rebuild to the previous size and specifications is covered, no matter how much the total cost.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2022 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female homeowners with a clean claim history, good credit and the following coverage limits:

• Coverage A, Dwelling: $250,000
• Coverage B, Other Structures: $25,000
• Coverage C, Personal Property: $125,000
• Coverage D, Loss of Use: $50,000
• Coverage E, Liability: $300,000
• Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible and a separate wind and hail deductible (if required).

These are sample rates and should be used for comparative purposes only. Your quotes will differ.

Bankrate Scores

Bankrate Scores primarily reflect a weighted rank of industry-standard ratings for financial strength and customer experience in addition to analysis of quoted annual premiums from Quadrant Information Services, spanning all 50 states and Washington, D.C. We know it is important for homeowners to be confident their financial protection covers the likeliest risks, is priced competitively and is provided by a financially-sound company with a history of positive customer support.

To determine how well the best home insurance companies satisfy these priorities, third-party agency ratings from J.D. Power, AM Best, S&P, NAIC, and Moody’s had the most impact on the companies’ Bankrate Scores. As price is a common consideration for homeowners, we analyzed quoted premiums based on 40-year-old male and female homeowners with a home policy with $250,000 in dwelling coverage. This profile, assessed across more than 35,000 ZIP codes in the U.S., provided a basis on which homeowners may compare each provider.

While coverage options, insurer availability, affordability and customer experience are often the top priorities, Bankrate also analyzed each insurer’s online and mobile resources for policy management and claims handling. Insurance is rapidly evolving to keep pace with our digital world, so these aspects also carried weight in determining Bankrate Scores.