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South Dakota business insurance: requirements and costs

South Dakota is a state where the labor department says no law requires an employer to carry workers' compensation insurance, yet an employer that does not secure coverage is deemed to have opted out of the workers' comp system and may be sued by an injured worker.⁠1⁠5 Insurers price comp from NCCI loss costs, each applying its own multiplier filed with the Division of Insurance, so two carriers can quote different prices for the same class.⁠8 Reported workers' comp spending is below the national figure.⁠11

Checked against 13 sources Last reviewed How we check figures

South Dakota at a glance

Workers’ comp requiredOptional: no law requires coverage; uninsured employers can be sued
Where employers buy itPrivate insurers; coverage is elective
Rates set byNational Council on Compensation Insurance
Employer comp cost, 2023$0.88 per $100 of covered wages (US $0.98)
Comp rate index, 2024$1.13, ranked 22 of 51 (1 = most expensive)
Employer health premium, 2025$8,985 single, $26,110 family (average total premium)
Auto liability minimum25/50/25

Workers' comp here is built around a choice rather than a mandate. An employer under the Act is directed to secure payment of compensation by buying a policy from an insurer or mutual authorized in the state, or by self-insuring.⁠2⁠3 Self-insurance requires annual proof of solvency to the Department of Labor and Regulation (DLR), an application fee capped by statute at $2,500, and a certificate of exemption.⁠4 There is no state fund. An employer that does neither is "deemed to have elected not to operate under the provisions of this title" (SDCL 62-5-7), and the DLR warns that an uninsured employer "may be sued in civil court by an injured worker."⁠1⁠5 We found no statutory fine for going uninsured; the stated consequence is the loss of the Act's framework and exposure to a civil suit.⁠1⁠5

Pricing follows NCCI. The DLR states that all insurers must adopt NCCI loss costs effective July 1, and it publishes each insurer's loss cost multiplier (LCM) as filed with the Division of Insurance. The list dated August 4, 2026 shows insurers using different multipliers, some changed effective July 1, 2026, so the premium for one class code depends on who writes it.⁠8 We could not open NCCI's July 1, 2026 filing summary, so no approved or proposed percentage change is shown. The NASI series points the same way: South Dakota employers spent $0.88 per $100 of covered wages on workers' comp in 2023, down from $1.03 in 2019, a 14% fall by our calculation, against a national figure of $0.98 in 2023.⁠11 Oregon's 2024 ranking, based on manual rates in effect January 1, 2024, put South Dakota 22nd most expensive of 51 jurisdictions at an index of $1.13 per $100 of payroll, 103% of the median.⁠12 A state can sit below the national figure on actual spending and above the median on rates; the two measure different things.

Health benefits are the other large insurance cost. AHRQ's 2025 survey found that 33.1% of South Dakota private-sector establishments in firms with fewer than 50 employees offered health insurance, and where they did, the average single premium was $7,990 with the employee paying an average of $2,002.⁠13 Across all firm sizes, 49.3% of establishments offered coverage and the single premium averaged $8,985.⁠13 For an employer, the decisions are whether to buy comp at all, how a carrier's multiplier changes the quote, and whether an officer should reject coverage for themselves.

Workers’ compensation in South Dakota

The DLR states there is no law requiring any employer to carry workers' compensation insurance.⁠1 An employer under the Act that does not secure payment by insurance or approved self-insurance is deemed to have elected out of the Act.⁠2⁠5

Who is exempt

  • Domestic servants, unless working more than 20 hours in a calendar week and more than 6 weeks in any 13-week period⁠6
  • Farm or agricultural laborers⁠6
  • Work activity participants⁠6
  • An executive officer of a corporation who gives the corporation written notice rejecting coverage, served more than 30 days before an injury⁠7
  • The state and its political subdivisions need not furnish insurance or security⁠5

Buying coverage and who sets the rates

From an insurer or mutual authorized to write comp in South Dakota, or by self-insuring with DLR approval; there is no state fund.⁠3⁠4

An employer may self-insure by giving the DLR annual proof of solvency and financial ability, paying an application fee (capped at $2,500) and obtaining a certificate of exemption, which the DLR may revoke.⁠4

Penalties for going without

No statutory fine found. An uninsured employer is deemed to have elected not to operate under the workers' comp title and, per the DLR, may be sued in civil court by an injured worker.⁠1⁠5

What South Dakota employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearSouth DakotaUnited States
2019$1.03$1.17
2020$0.91$1.08
2021$0.89$1.01
2022$0.88$1.00
2023$0.88$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts South Dakota’s index for rates in effect on 1 January 2024 at $1.13 per $100 of payroll, 3% above the national median of $1.09 (rank 22 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Employer health insurance in South Dakota

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureSouth DakotaFirms under 50United States
Single coverage, total premium$8,985$7,990$9,025
Family coverage, total premium$26,110$22,476$26,281
Employee share, single$1,730–$1,817
Employers offering coverage49.3%33.1%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in South Dakota

Every vehicle registered in South Dakota, including business vehicles, must carry at least 25/50/25 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Owner's liability policy limits: $25,000 per person and $50,000 per accident for bodily injury, $25,000 for property damage.⁠9 Policies delivered in the state must also include uninsured and hit-and-run motorist coverage equal to the bodily injury limits, capped at 100/300 unless the insured asks for more.⁠10

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other South Dakota rules that affect insurance costs

Loss cost multipliers are public

The DLR posts every insurer's filed loss cost multiplier, with effective date and previous value, in one list (dated August 4, 2026 in our copy). Because all insurers adopt NCCI loss costs on July 1, the multiplier is where carriers differ, so you can compare the factor before asking for quotes.⁠8

Corporate officers can reject coverage

An executive officer can opt out of the Act by serving written notice on the corporation when elected or appointed, or more than 30 days before an injury, and can withdraw the rejection the same way.⁠7

South Dakota compared with its neighbors

Workers’ comp and health insurance costs, South Dakota and neighboring states
South Dakota$0.88$1.13$8,985
Iowa$1.02$1.21$8,620
Minnesota$0.88$1.25$8,586
Montana$1.39$1.34$8,899
Nebraska$0.89$1.12$8,907
North Dakota$0.81$0.50$9,318
Wyoming$1.57$1.41$8,997

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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