The dwelling forms (DP-1, DP-2, DP-3), their perils and their coverages are covered in the national Dwelling Policy guide. South Dakota questions in this area mostly test the state's valued policy law and the notice rules that apply to dwelling and homeowners policies. This guide covers those.

Valued policy law (SDCL 58-10-10)

What it does

• When insured real property is wholly destroyed by fire, tornado or lightning, the amount of insurance in the policy is conclusively the property's true value.
• The insurer pays the policy limit. It can't argue that the house was worth less.

When it applies

• The total loss must happen 90 days or more after the policy was written.
• If the insured asked to raise the limit by 25% or more, the 90 days restart from the increase.
• For a loss inside the 90-day window, the policy's own valuation terms apply (ACV or replacement cost).

Special cases

• Builders' risk: valued at the actual value of the construction finished when the loss happens.
• More than one insurer: each pays only its share, in proportion to its limit compared with the total insurance.
• Appurtenant structures (such as a detached garage): settled at replacement cost or ACV under the policy, unless a specific value was assigned before the loss.
• Commercial blanket coverage over two or more buildings is excluded.

Example: a dwelling insured for $250,000 for two years burns to the ground. The insurer pays $250,000, even if an appraiser would value the house lower.

Cancellation and nonrenewal

• Cancellation notice: at least 20 days, with the specific reasons (SDCL 58-33-60).
• After 60 days in force, cancellation is limited to listed reasons (58-33-61). These include nonpayment, fraud or misrepresentation, an increased hazard, a substantial change in risk, code violations and breach of policy terms.
• Nonrenewal: at least 30 days' notice for homeowners and other personal lines policies (58-1-14, 58-1-15).
  • No notice is needed when the insured moves to another insurer in the same group with the required transfer notice.
• When the insurer cancels, unearned premium is returned at least pro rata (ARSD 20:06:29:01).

Common exam traps

• The valued policy law covers fire, tornado and lightning. It doesn't cover every peril.
• It applies only to a total loss of real property.
• The 90-day rule restarts after a requested limit increase of 25% or more.
• Personal lines nonrenewal needs 30 days' notice. Cancellation needs 20 days.