South Dakota State Resource
South Dakota's Restrictions on Binding Appraisal
South Dakota has a distinctive and important treatment of appraisal provisions in automobile insurance policies. The South Dakota Division of Insurance has determined that binding appraisal and arbitration provisions are prohibited under the applicable South Dakota insurance framework. Approved appraisal language requires agreement by both parties and the result cannot be binding. This page explains South Dakota's distinctive framework and the status of proposed legislation SB 227.
Classification: SPECIAL APPRAISAL RESTRICTIONS
South Dakota's Division of Insurance has determined that binding appraisal and arbitration provisions are prohibited under the applicable South Dakota insurance framework. Approved appraisal language requires agreement by both parties and the result cannot be binding. South Dakota appraisal under the approved framework is therefore nonbinding — a significant distinction from the majority of states where a policy appraisal clause produces a binding result.
South Dakota's Restrictions on Binding Appraisal
South Dakota's Division of Insurance has determined that binding appraisal and arbitration provisions are prohibited under the applicable South Dakota insurance framework. This is a significant and distinctive feature of South Dakota's automobile insurance regulatory environment.
Approved appraisal language in South Dakota requires agreement by both parties and the result cannot be binding. This means that unlike many other states where a policy appraisal clause produces a binding result, South Dakota's approved framework produces a nonbinding result.
South Dakota appraisal under the approved framework is therefore nonbinding — a significant distinction from the majority of states where a policy appraisal clause produces a binding result. Policyholders and claimants should be aware of this distinction when evaluating their options in a South Dakota automobile insurance dispute.
ACV and Total-Loss Valuation in South Dakota
ACV in South Dakota is the fair market value of the vehicle immediately before the loss. The determination considers the vehicle's year, make, model, trim, mileage, condition, and equipment, as well as comparable vehicles available in the applicable market.
An independent appraisal can examine the same evidence and develop an objective opinion of value. Even where the appraisal result is nonbinding under South Dakota's framework, an independent appraisal can provide documented, evidence-based valuation evidence.
2026 South Dakota Proposed Legislation — SB 227
South Dakota Senate Bill 227 proposed a 75% total-loss threshold during the 2026 legislative session. SB 227 did not become law. The proposed 75% threshold is not current South Dakota law.
Under the current South Dakota framework, an insurer's economic total-loss determination is governed by the applicable policy and claims-settlement rules. There is no enacted statutory total-loss percentage threshold derived from SB 227.
South Dakota Vehicle Appraisal — Frequently Asked Questions
Does South Dakota allow binding appraisal in auto insurance policies?
No. South Dakota's Division of Insurance has determined that binding appraisal and arbitration provisions are prohibited under the applicable South Dakota insurance framework. Approved appraisal language requires agreement by both parties and the result cannot be binding.
Does South Dakota have a total-loss threshold?
South Dakota Senate Bill 227 proposed a 75% total-loss threshold during the 2026 legislative session, but SB 227 did not become law. There is no enacted statutory total-loss percentage threshold derived from SB 227 under current South Dakota law.
How is ACV determined in South Dakota?
ACV is the fair market value of the vehicle immediately before the loss, considering year, make, model, trim, mileage, condition, and equipment, as well as comparable vehicles in the applicable market.
Can an independent appraisal still be useful in South Dakota?
Yes. Even where the appraisal result is nonbinding under South Dakota's framework, an independent appraisal can provide documented, evidence-based valuation evidence to support a dispute about the amount of a loss.
Official Sources & References
- South Dakota Division of Insurance — Property/Casualty Filing Requirements — South Dakota DOI — guidance on approved appraisal language and binding appraisal restrictions. dlr.sd.gov
- South Dakota Division of Insurance — South Dakota DOI — consumer resources and automobile claims guidance. dlr.sd.gov
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