South Dakota ranks 16th in the nation for car insurance costs, with annual premiums averaging around $1,707. Premiums are lower than neighboring North Dakota and substantially lower than neighboring Montana. Auto insurance premiums are affected by an area’s weather, crime rates, traffic information, uninsured motorist population and DUI statistics, among other factors. State laws also play a role in determining the cost of insurance premiums.

Car insurance companies determine rates by assessing many factors including a vehicle’s risk of being involved in an auto accident. The more likely a vehicle is to be damaged, the more auto insurance will cost in order to compensate for the risk. Additionally, insurance will cost more in areas with a high population of uninsured drivers because these drivers pose a financial risk to insurance companies. If an accident is caused by a person without insurance, the other insurance company must absorb more cost for the collision.

What factors influence the cost of car insurance in South Dakota?

In South Dakota, one of the primary reasons for the high cost of premiums is the state insurance requirements themselves. South Dakota has fairly high limits for liability insurance, causing every driver to carry substantially more insurance than he might in another state. If all states mandated the same amount of insurance coverage, South Dakota’s rates would be much more affordable.

Weather also plays a role in insurance. South Dakota is prone to hail and windstorms, which are extremely common sources of auto damage. It’s not uncommon for a vehicle to become a total loss due to hail damage, even if the car is still fully functional. These claims lead to a tremendous cost for insurance companies, especially because the damage is usually spread out over a fairly large area and results in multiple claims being filed at once.

South Dakota is also prone to snow and ice storms. Although snow does not cause immediate damage to a vehicle, icy roads are a major contributor to auto accidents. Black ice is especially dangerous and is much more common in the northern states than throughout the rest of the country.

Other factors that contribute to the cost of insurance in an area include population density, crime rates, DUI statistics and the number of uninsured motorists in the state. South Dakota is a fairly rural state, so crime and traffic are not a major factor in the state’s insurance premiums. South Dakota also has a low rate of uninsured motorists, with only 7 percent of drivers operating without insurance.

South Dakota also has a low incidence of drunk driving when compared to other states, but a large percentage of accidents are caused by intoxicated drivers. In 2009, there were only 131 automobile fatalities in South Dakota; of these, 53 were caused by drunk drivers.

Car Insurance Requirements in South Dakota

South Dakota car insurance requirements are higher than those in many other states. South Dakota requires all drivers to maintain a car insurance policy with at least $25,000/$50,000 liability insurance and $25,000 for any property damage liability. While these limits are higher than other states require, drivers may wish to purchase additional liability insurance in order to cover for injuries or damage that they cause.

South Dakota is a tort state, meaning that a driver can be sued for injuries caused in car accidents. In order to protect your assets from this risk, it’s always a good idea to buy as much liability insurance as you can afford. If your liability limits are exhausted, you will be responsible to pay for the remainder out of your pocket.

Drivers may also wish to purchase collision and comprehensive coverage. Collision insurance covers damage to the insured vehicle caused by a car accident with another person or property while a comprehensive policy pays for damage caused by animals, vandalism and weather events (hail for example). Together, collision and comprehensive coverage make full coverage auto insurance.

Full coverage insurance is optional for drivers who own their cars outright, but it is required by lien holders or financing companies until the car has been paid off. Even cars with clean titles can benefit from full coverage insurance if they are new or valuable.

Depending on your needs, you may also wish to purchase personal injury protection, rental reimbursement, roadside assistance or other types of supplemental auto insurance. You can also purchase uninsured motorist coverage to protect you in accidents caused by drivers without insurance. All coverage can be purchased separately, allowing a driver to customize his policy as necessary to suit his needs.

Whether you’re moving to South Dakota from another state or simply looking for affordable auto insurance in the area, you can begin searching for car insurance by obtaining a free quote online. Once you’ve chosen a company, you can discuss the policy with the company’s agent or customer service department to create a policy that suits your needs.