Home insurance costs in S.D. are rising faster than most regional states
Experts say increases are being driven by more extreme weather in region
(Broadcast reader is below the main story.)
By Todd Epp, Northern Plains News
Homeowners in South Dakota are paying sharply higher insurance premiums, with rates rising faster than in most neighboring states due to severe weather and the increasing cost of rebuilding, according to the Federal Reserve Bank of Minneapolis.
The Federal Reserve Bank of Minneapolis reported, citing data from S&P Global, that the average annual premium for a homeowner’s insurance policy in South Dakota increased 41 percent over the past seven years, compared to a 34 percent national average. In the same period, inflation rose just 24 percent.
In comparison, Minnesota and Montana—also in the Ninth Federal Reserve District—saw premiums rise faster than the national average, but not as quickly as South Dakota, according to the Federal Reserve Bank of Minneapolis.
S.D. Home Premiums Are High but Not the Highest
According to Bankrate, a consumer financial services company, Nebraska, Kansas, and Oklahoma, which are more frequently hit by tornadoes and hail, have even higher average premiums. Nebraska homeowners pay an average of $4,745 per year, Kansas $4,072, and Oklahoma $4,565, compared to $2,455 in South Dakota, Bankrate reported in 2024.
In a September 2024 report, the Federal Reserve Bank of Minneapolis said catastrophic weather events are “a key driver” of premium hikes in the Upper Midwest, including South Dakota, Minnesota, and Montana. The report noted that nearly half of the United States’ 19 “billion-dollar storms” in 2023 struck states in the Ninth District, which includes South Dakota.
“In Florida, it’s hurricanes,” the Federal Reserve Bank of Minneapolis said in its report. “In California, Montana, and many Western states, it’s wildfires. In the Upper Midwest, it’s wind and hailstorms. All of which are exacerbated by the inflation of construction costs”.
Impact of Crop Insurance Payments
South Dakota’s insurance market is also affected by the high frequency of crop insurance payouts due to extreme weather. Between 2001 and 2022, South Dakota farmers received nearly $10 billion in payouts from the Federal Crop Insurance Corporation. Payments were for weather disasters like drought, excess moisture, and hail, which rose significantly, according to U.S. Department of Agriculture data.
South Dakota ranked third nationally for drought payouts ($4.1 billion), third for excess moisture ($3.3 billion), and sixth for hail damage ($620 million) over that period, South Dakota News Watch reported.
Anne Schechinger, Midwest director for the Environmental Working Group, said there is a strong correlation between rising crop insurance payouts and the increasing impacts of climate change.
“We’re very confident there’s a strong connection to climate change here because farms are some of the businesses most vulnerable to climate change purely because of the nature of farming,” Schechinger said in an interview with South Dakota News Watch.
Scott VanderWal, president of the South Dakota Farm Bureau Federation, said the crop insurance program “is so vitally important for the ability of farmers and ranchers to manage their risk” in an industry dependent on the weather for success, according to South Dakota News Watch.
The rising cost of insurance impacts both urban and rural South Dakotans. According to the Federal Reserve Bank of Minneapolis, higher premiums mean higher monthly costs for families in Sioux Falls, Rapid City, and across the state. They can be especially difficult for those on fixed incomes.
Impact on S.D. Homeowners
Rising insurance costs in South Dakota are outpacing most of the region, directly impacting monthly budgets for homeowners, renters, and farmers. According to the Federal Reserve Bank of Minneapolis, the trend is expected to continue as extreme weather becomes more common.
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Homeowners in South Dakota are seeing insurance premiums rise faster than in most neighboring states.
That’s according to reporting by Northern Plains News.
The Federal Reserve Bank of Minneapolis says South Dakota’s average home insurance premium jumped forty-one percent in seven years, outpacing inflation.
Bankrate reports Nebraska, Kansas, and Oklahoma have even higher premiums, but South Dakota’s rates are still above the national average.
Experts at the Federal Reserve say severe weather, like hail and tornadoes, is a key reason for the increase.
South Dakota News Watch reports that crop insurance payouts to state farmers have also soared due to storms and drought.
These rising costs hit families, farmers, and renters across the state.