Workers’ Compensation Insurance Policy & Law in South Dakota

How Is Workers’ Compensation Insurance Defined in South Dakota?

The state of South Dakota defines workers’ compensation insurance as a system of insurance that provides benefits for employees who become injured or ill from their job. Workers’ compensation in the state covers injuries or illnesses caused or made worse by work or the workplace. The benefits provided by workers’ compensation insurance are intended to pay medical and disability benefits for work-related injuries and diseases and help the employee return to work as soon as possible.

What Are the Laws Regarding Workers’ Compensation Coverage in South Dakota? 

Although there is no law in South Dakota that requires employers to provide workers’ compensation, the state highly recommends it for nearly every employer. This is because without workers’ comp coverage, a South Dakota business could be sued in civil court by an injured or ill employee, resulting in losses that could potentially bankrupt the business. When South Dakota employers choose to provide coverage for their employees, they are also choosing to provide their business with legal protection against claims that the business’s negligence caused or exacerbated the employees’ injuries or illnesses. 

Sole proprietors and independent contractors, like other businesses throughout South Dakota, are not legally required to have workers’ comp coverage. However, many sole proprietors and independent contractors choose to maintain coverage for themselves in order to meet contract stipulations and to protect themselves against the costs associated with on-the-job injuries or illnesses. 

What Does Workers’ Compensation Insurance Cover in South Dakota?

In the event of a workplace accident, South Dakota workers’ comp insurance provides both medical coverage and payments for lost wages and permanent disabilities. This can include temporary or permanent benefits including but not limited to:

• Medical care
• Temporary total disability
• Temporary partial disability
• Permanent total disability
• Permanent partial disability
• Death benefits
• Rehab and retraining

These benefits are provided to all employees who are covered by a workers’ comp policy, with the exception of: 

• Domestic servants (unless working for an employer more than 20 hours in any calendar week and for more than six weeks in any 13-week period)
• Farm or agricultural labor
• One whose employment is not in the usual course of trade, business, occupation, or profession of the employer (independent contractors, including real estate agents and owner-operators of trucks certified as independent contractors by the Department of Labor and Regulation)
• Certain elected officials of the state or any subdivision of government
• Workfare participants

What Are the Penalties in South Dakota for Not Having Workers’ Comp Insurance Coverage?

Although there is no law requiring businesses in South Dakota to have workers’ compensation coverage, not having coverage is a serious matter. If you do not provide workers’ comp coverage for your employees, you open yourself to the possibility of legal action from an injured or sick employee or their survivors. In the event that you’re sued in regard to a workplace injury, illness, or death, you can be held liable for all medical expenses related to the incident plus twice the amount of disability income or death benefits allowed under South Dakota law.

Learn more about workers’ comp coverage requirements in states other than South Dakota here. 

What Types of Injuries Are Covered by South Dakota Workers’ Comp?

South Dakota state law outlines specifically which types of injuries are covered by workers’ comp insurance in the state. However, there are general guidelines that can help employers understand what typically qualifies for a workers’ comp claim.

The types of injuries typically covered by workers’ comp are:

• Injuries that are not the result of intentional self-harm or harm from drug use, alcohol use, or fighting
• Injuries that fall within the general “course and scope” of the worker’s employment, such as long-term occupational injuries, including back strain from repetitive motion

For more information about the workers’ comp claim process, visit our learning center. 

What Are Workers’ Comp Death Benefits in South Dakota?

According to South Dakota state law, death benefits are as follows: 

If a work-related injury causes death, compensation is payable to the employee’s spouse at the rate of 66.67% of the employee’s average weekly wage (with overtime included at the straight rate) and is subject to the state minimum and maximum amounts as outlined by law. If the spouse remarries, a lump sum equal to two years of compensation will be paid. In situations where there are eligible surviving children of the employee, the compensation becomes payable to them two years after the date of remarriage.

If the only survivors are children, the child or children receive compensation at the rate of 66.67% of the average weekly wage of the employee until age 18 (or age 22 if a full-time student). If a child is physically or mentally incapable of self-support, benefits will be paid for the life of the child.

An additional $50 per month must be paid to each legally dependent child of the deceased employee from the date of the employee’s death until that child reaches the age of 18 years. A deceased employee’s dependents are each also entitled to $2,000 a year for up to five years if they are enrolled full-time at an accredited post-secondary educational institution in South Dakota.

Workers’ compensation also provides funeral and burial expenses up to $10,000, plus the cost of transporting the body if death occurs outside the community where the employee is to be buried.

How Do Workers’ Comp Settlements Work in South Dakota? 

Like other states, workers’ comp settlements in South Dakota are mutually beneficial agreements made between the injured worker, their employer, and the insurance company that close workers’ comp claims completely. Settlements usually result in the employee being paid an agreed-upon amount of compensation (via structured monthly payments or one lump sum). In exchange, the worker agrees not to pursue additional benefits or civil litigation in relation to the claim in the future, and the claim is closed permanently. 

What Is the Statute of Limitations Regarding Workers’ Comp in South Dakota? 

In South Dakota, employees must file their workers’ comp claim within one year from the date of the injury or discovery of the illness.

How Much Does Workers’ Compensation Insurance Cost in South Dakota?

As in other states, the cost of workers’ comp insurance premiums in South Dakota will vary depending on a variety of circumstances. Private insurers set their own rates, which are often determined using several factors that are unique to each business. 

For South Dakota business owners looking for coverage, the best way to tell how much you’ll pay is to compare quotes from multiple companies. Every business’s premiums will be different depending on claims history and business categorization. For example, if your business is considered low-risk, like accounting, your rates might be lower than those of businesses that are considered high-risk, like oil and gas. 

Many factors unique to your business will be utilized to determine your exact insurance premiums. 

Some of these factors include: 

• The location of your business
• The size of your business and the number of employees 
• The industry in which your business operates

Hoping to lower your insurance premiums? Luckily there are preventative steps that might be able to help. Insurance providers often consider how seriously businesses take workplace safety when calculating workers’ comp premium rates. This means that taking simple steps such as enacting employee training sessions, following industry best practices, and creating safety protocols could potentially help lower your insurance premiums. 

In addition, South Dakota business owners can save money on their insurance by participating in one of several plans. Each of these plans rewards you for maintaining a safe work site and making few or no claims for work-related injuries.

• Merit Rating Plan: This plan is designed for small employers who are not currently experience rated or pay a premium less than $3,750 per year. It provides you with insurance premium discounts up to 10% based on your immediate past (three years) claims experience. This plan is applicable to both voluntary and assigned risk policies.
• Experience Rated Plan: This plan is designed for larger employers who pay more than $3,750 per year in premiums. This plan is specific to your individual experience. Premiums may be credited or debited based on past claims and the cost of those claims. It is also applicable to both voluntary and assigned risk policies.
• Scheduled Rating Plan: This plan is designed for experience-rated employers insured in the voluntary insurance market. It provides for premium discounts of up to 24% based on your willingness to participate in a safety plan prescribed by your insurance company. Insurers are not required to offer this plan, so you may need to shop around to find a company that does. There are more than 200 insurance companies providing coverage in the voluntary insurance market in South Dakota.

How Do I Get Workers’ Comp for My South Dakota Business?

South Dakota business owners seeking workers’ comp coverage can purchase a policy through any commercial insurance company, agent, or broker that is licensed to operate in the state. Those who cannot get approved for private insurance due to being high risk can get coverage through the state’s assigned risk program, which is administered by the National Council on Compensation Insurance (NCCI). This is often referred to as a provider of last resort. 

In addition, South Dakota businesses can opt to self-insure if they meet certain financial requirements. Self-insurance requires the business to be held financially responsible for the cost of all claims and related expenses in the event of a claim. With self-insurance, businesses must pay out of pocket without the assistance of insurance. This is not an ideal choice for most businesses, as it can be extremely costly in the event of an incident. 

Where Can I Get Workers’ Compensation For My South Dakota Business?

We offer workers’ compensation to businesses no matter where you are in South Dakota. If you are located in the Black Hills or Badlands, the East River, or Siouxland, we’ll help you protect your South Dakota employees.

If you need workers’ comp coverage for your South Dakota business, you can purchase a policy through any private insurance company, agent, or broker that is licensed to operate in the state. So even if you aren’t in any of the following cities, know that we can still help you:

• Sioux Falls
• Rapid City
• Aberdeen

Luckily, South Dakota businesses can get workers’ comp insurance coverage more easily than ever before when they partner with the right private insurance provider. Cerity created a faster, more affordable way to get workers’ comp. We help South Dakota business owners like yourself get insurance premium quotes fast — without phone calls or paperwork. With our proprietary tools and modern technology, we provide business owners with quick quotes and instant policies. 

Visit our free online quote tool and begin protecting your South Dakota business today.