The national guides cover the P&C basics: perils and hazards, ACV and replacement cost, negligence and liability, binders and policy structure. This guide adds the South Dakota rules that the property, casualty and personal lines exams test. They cover binders, certificates, cancellation and nonrenewal, return of premium, rates, the valued policy law, negligence, and the marine definition. The sources are SDCL 58-1, 58-9, 58-10, 58-11, 58-24 and 58-33, ARSD 20:06:29 and SDCL 20-9-2.

Binders and certificates (SDCL 58-11-29 to 58-11-32)

• A binder may be oral or written. It includes all the usual terms of the policy it stands in for (58-11-29).
• A binder is valid until the policy is issued or for 90 days from its effective date, whichever is shorter (58-11-30).
  • It can be extended past 90 days only with the Director's written approval or under the Director's rules (58-11-31).
• The binder rules don't apply to life or health insurance (58-11-32).
• A producer who knowingly makes a false material statement on a binder, certificate of insurance or other proof of insurance commits a Class 1 misdemeanor for each offense (58-11-29).
• Issuing or possessing a counterfeit certificate with intent to deceive is a fraudulent insurance act (58-4A-2).

Cancellation (SDCL 58-33-60 to 58-33-65)

These rules cover most property and casualty policies. Auto policies follow their own rules in SDCL 58-11 (58-33-65). See the South Dakota Personal Auto guide.

• Notice: mailed or delivered at least 20 days before cancellation, with a written explanation of the specific reasons (58-33-60).
• After the policy has been in force 60 days, the insurer may cancel only for (58-33-61):
  • nonpayment of premium
  • fraud or material misrepresentation
  • an act or omission of the named insured that increases a hazard insured against
  • a substantial change in the risk
  • building or safety code violations
  • insurer solvency concerns
  • breach of policy terms
  • other reasons the Director approves
• The insured's age isn't a permitted reason.
• Improper cancellation: an insured can complain to the Division within 60 days after the cancellation date (58-33-62). The Director can order coverage reinstated to the end of the policy period and impose a money penalty (58-33-63).

Nonrenewal notice (SDCL 58-1-14, 58-1-15)

No nonrenewal notice is needed when the insured is moved to another insurer in the same group with the required transfer notice.

Return of premium (ARSD 20:06:29:01)

• When the insurer cancels, the unearned premium is returned at least pro rata.
• Short-rate may be used only when the policyholder asks to cancel.
  • A cancellation isn't treated as the policyholder's request if the insurer failed to give notice of a premium increase.
• A filed rating plan may set a minimum premium of up to $25.

Rates (SDCL 58-24)

• Rates may not be excessive, inadequate or unfairly discriminatory (58-24-5). The chapter isn't meant to discourage reasonable competition (58-24-1).
• Insurers file their rates and rating plans. The filing date is the effective date unless the insurer proposes a later one (58-24-10).
• Rate filings consider loss experience over the most recent 5 years available (58-24-6).
• An affected insured may ask in writing for the pertinent information about a rate (58-24-28).

Valued policy law (SDCL 58-10-10)

• Applies when real property insured against fire, tornado or lightning is wholly destroyed.

• The amount of insurance is conclusively the property's true value and the measure of damages.

• It applies only if the total loss happens 90 days or more after:

  • the policy was written, or
  • the limits were raised by 25% or more at the insured's request

  Within that window, the policy's own valuation terms apply.

• Exceptions and special rules:

  • Builders' risk is valued at the actual value of the construction finished at the time of loss.
  • With several insurers, each pays its proportional share.
  • Appurtenant structures are settled at replacement cost or ACV under the policy, unless a specific value was assigned before the loss.
  • Buildings under a commercial blanket limit covering two or more buildings are excluded.

Marine and transportation (SDCL 58-9)

• Marine and transportation insurance includes:
  • personal property floaters
  • marine builder's risks
  • jewelry and precious metals in transit or otherwise
  • bridges, tunnels and other instrumentalities of transportation and communication, but generally not buildings
• It excludes life insurance, surety bonds and bodily injury from owning or using an automobile (58-9-6 to 58-9-10).
• Marine protection and indemnity covers loss or liability from owning, operating or using a vessel.

Negligence and suits

• Comparative negligence (slight/gross rule): a plaintiff recovers only if their contributory negligence was slight compared with the defendant's. Damages are then reduced in proportion (SDCL 20-9-2).
  • More than slight negligence bars recovery.
• A suit on a contract must be brought within 6 years after the cause of action accrues (SDCL 15-2-13).

Common exam traps

• Binders last 90 days at most, and the rule doesn't cover life or health.
• Cancellation notice is 20 days. After 60 days in force, only the listed reasons are allowed.
• Homeowners nonrenewal needs 30 days' notice. Commercial needs 60.
• An insurer-initiated cancellation returns premium pro rata. Short-rate applies only when the insured asks to cancel.
• The valued policy law covers fire, tornado and lightning total losses to real property, and only after the 90-day window.
• South Dakota's negligence rule is slight vs. gross, not 50% or 51%.