Property Casualty Rate & Form Filing Requirements
To speed data processing, companies are requested to put their five-digit National Association of Insurance Commissioners (NAIC) identification number on the filing cover letter. (Group numbers or Internal Revenue Service numbers are not required.)
Subjective IRPMs are limited to –/+25%.
All Property and Casualty Except Personal Auto -
Personal Auto - Cancellation/Non-Renewals
Supplemental Coverages for Personal Automobile Vehicles
Personal Auto and Commerical Auto
Exempt Commercial Policyholders
Binding appraisal and arbitration provisions are prohibited in South Dakota insurance contracts pursuant to Bulletin 98-5 and South Dakota Codified Law (SDCL) 21-25A-3. However, the Division has approved language that can be utilized in filings which complied with South Dakota law. The criteria to be met are:
The following is language the Division has approved.
If we and you do not agree on the amount of loss, then an appraisal of the loss may be made if both parties agree to the appraisal. If so agreed, each party will select a competent appraiser. The two appraisers will select an umpire. The appraisers will state separately the actual cash value and the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will not be binding.
Each party will:
- Pay its chosen appraiser; and
- Bear the expenses of the appraisal and umpire equally.
We do not waive any of our rights under this policy by agreeing to an appraisal.
An insurance company can not charge a cancellation fee. However, the insurer can calculate return premium short-rate if the insured cancels mid-term. Also, if an insured replaces coverage with another company, cancellation must coincide with the date of the new coverage. (Administrative Rule of South Dakota (ARSD) 20:06:29:01, 20:06:29:02 and 20:06:29:03.
Calculating Cancellation Pro Rata Earned Refund
Divide the number of days the policy was in force by the policy term. (For a one-year policy term, divide by 365; for a six-month policy term, divide by 182.5; and for a three-month policy term, divide by 91.25.)
Example: suppose an annual policy was in force for 60 days and had an annual premium of $4,365:
60 ÷ 365 = .1644
Next, multiply the resulting quotient by the total policy premium:
.1644 x $4,365 = $717.61 (This is the amount the company earned.)
Calucating Cancellation Pro Rata Unearned Refund
Divide the number of days the policy was not in force by the policy term. (For a one-year policy term, divide by 365; for a six-month policy term, divide by 182.5; and for a three-month policy term, divide by 91.25.)
Example: Suppose an annual policy is in force for 60 days and has an annual premium of $4,365. First, divide 305 (the number of days the policy was not in force) by 365 (the number of days in the policy term):
305 ÷ 365 = .836
Next, multiply the resulting quotient (.836) by the total policy premium, $4,365 in this example.
.836 x $4,365 = $3,649.14
($3,659.14 is the amount the company did not earn.)
You can also calculate the unearned as follows: Subtract the earned premium's percentage and subtract it from 1. Using the above example,
1 - .1644 = .8356
(When rounded, this gives you the same answer as above, .836)
Calculating Short Rate Unearned
Multiply the pro rate unearned (.836 in the example above) by .9. Then multiply the resulting product by the total policy premium.
.836 x .9 = .7524
.7524 x $4,365 - $3,284.23
($3,284 is the short-rate unearned premium.)
Calculating Cancellation Short Rate Earned Refund
Subtract the short-rate unearned (.7524 in the example above) from 1. Then multiply the resulting product by the total policy premium, $4.365 in the example above.
1 - .7524 = .2476
.2476 x $4,365 = $1,080.77
($1.080.77 is the short-rate earned premium.)
A property/casualty insurance contract may not be canceled mid-term unless the cancellation is based on one of the reasons listed in South Dakota Codified Law (SDCL) 58-33-61. If this can be documented, you must provide the insured with 20 days' prior notice as required by SDCL 58-33-60.
SDCL 58-1-14 - Notice of nonrenewal of policy must be mailed sixty days prior to renewal date - Exceptions.
SDCL 58-1-15 - Homeowner's insurance policy defined - Notice of nonrenewal to policyholder required - Timing of notice.
An automobile insurance contract can be canceled for any reason as long as the policy has not been in effect for more than 60 days (South Dakota Codified Law (SDCL) 58-11-47). If the policy has been in effect for more than 60 days, it can only be canceled for two reasons:
An insurance company can non-renew an insurance contract for any reason as long as it gives 60 days' prior notice (except those grounds prohibited by SDCL 58-11-51).
This section shall not apply to nonrenewal.
Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of such renewal.
An insurance agent must offer the three supplemental coverages listed in South Dakota Codified Law (SDCL) 58-23-8. (SDCL 58-23-7) These coverages are not required to be offered on commercial policies.
SDCL 58-23-6 - Supplemental automobile coverage - Definition of terms.
Taking Betterment on an Automobile Claim
The Division only allows betterment to be taken when the following two criteria have been met:
The following definition and provision have been approved for use in South Dakota.
Provision: We may deduct for betterment from the amount we pay for the loss only if the repair or replacement results in an increase in the fair market value of the vehicle.
Definition: Betterment as used in this provision means the difference between:
- The fair market value of the vehicle before the loss.
- The fair market value of the vehicle after repair or replacement.
Uninsured Motorist Coverage
Pursuant to Clark vs. Regent Ins. Co. (1978) 270 NW 2d 26, an insurance policy requiring physical contact between vehicles as a condition of coverage under uninsured motorist hit-and-run coverage was unenforceable as in violation of the public policy and the general purpose of South Dakota Codified Law (SDCL) 58-11-9.
The Division has also established the following minimum requirements for the approval of Extended Reporting Period endorsements:
Defense Within Limits Policies
The South Dakota Division of Insurance established a Division Policy in 1989 with regard to liability policies having defense within the policy limits. The Division also established a Policy in regards to extended reporting period endorsements for Claims Made Policies. The criteria established for these Division Policies is as follows:
SDCL 58-24-70 - Exemption from rate and form filing requirements for policy issued to exempt commercial policyholder - Disclosure requirements.
SDCL 58-24-71 - Third-party consultant disclosure requirements.
SDCL 58-24-72 - Promulgation of rules.
SDCL 58-24-73 - Insurer to maintain and provide copies of disclosures--Examination.
SDCL 58-24-74 - Insurer to maintain records relating to insurance sales to exempt commercial policyholder - Examination by director.