For construction companies and contractors in South Dakota, having adequate insurance coverage is essential to protect your business from the diverse risks inherent in contracting work. As a contractor, you face exposures ranging from third-party property damage and bodily injury claims to employee injuries and illnesses that can derail your company. Purchasing cost-effective insurance tailored to your specific operations is crucial to safeguard your business’s assets and future. 

This comprehensive guide will uncover typical insurance costs for South Dakota contractors across popular policies like general liability, workers’ compensation, surety bonds, commercial auto, inland marine, and more. We’ll explore the key variables that can impact your premiums, provide benchmarking data for small, medium and large contractors, and suggest strategies to secure favorable insurance rates.

Understanding typical contractor insurance expenses in your state allows you to accurately evaluate policies and coverage options suitable for your business. While your exact premiums depend on your unique risk attributes, this data offers helpful context to inform smart insurance decisions.

South Dakota contractors need to have the proper contractor insurance to operate legally in the state. This typically includes general liability coverage for contractors to protect against third-party claims and workers’ compensation insurance for contractors to cover employee injuries on the job.

Key Factors Influencing Insurance Costs for Contractors in South Dakota

Multiple variables influence what South Dakota contractors pay for insurance. Being aware of these factors allows you to minimize costs through strategic risk management.

Main factors that affect contractor insurance premiums include:

Type of work – Certain contracting fields like roofing, plumbing, electrical, and HVAC are seen as higher-risk and have higher premiums. Hazardous or dangerous work leads to increased costs.

Years in business – Contractors who are new or just starting out often pay more for insurance until they build experience. Insurers view experience as an indicator of lower risk.

Claims history – Past claims filed against your business, especially costly ones, will drive up premiums. Too many claims can make a contractor uninsurable. A clean claims history helps lower rates.

Coverage limits – Higher liability policy limits or workers’ compensation benefits mean higher premiums. You must balance cost versus amount of protection.

Number of employees – More employees on your payroll increases workers’ comp and other premiums. Rates rise as payroll and headcount grow.

Safety record – Good safety programs and low OSHA violations help reduce premiums. Poor safety leads to increased insurance costs.

Business size – Larger contracting firms often get lower rates thanks to economies of scale and broader risk distribution. Small contractors tend to pay more.

Insurance provider – Rates can vary significantly between insurance companies. It pays to shop around for competitive pricing.

Deductibles – Choosing higher deductibles reduces premiums but increases your out-of-pocket costs should a claim occur.

Risk transfer – Transferring risk to subcontractors through insurance requirements helps reduce your premiums.

Business location – Urban areas typically have higher premiums than rural areas due to increased exposures.

State laws – South Dakota laws around benefits, exclusions, rate-setting and premium discounts influence costs.

Controlling risk is the key to keeping contractor insurance costs in South Dakota affordable. Maintaining excellent records, safety practices, qualifications and securing properly structured policies tailored for your business will help minimize premiums.

Small, Medium, Large Contractor Benchmarking in South Dakota 

The table below displays our definitions for small, medium and large contractors in South Dakota alongside typical insurance coverages secured. This provides a general benchmark to help you understand how your costs compare to other firms of similar size in the state.

CriteriaSmall ContractorMedium ContractorLarge ContractorXL Contractor
Revenue$150K$500K$1M$2.5M
Employees13510
Autos1235
Worth of Tools$5K$10K$25K$50K
General LiabilityYesYesYesYes
Workers’ CompYesYesYesYes
Commercial AutoYesYesYesYes
Inland MarineYesYesYesYes
UmbrellaNoNoYesYes
South Dakota Average Total Insurance Premium

Keep in mind premiums can fluctuate based on your unique attributes like location, services provided, safety record, number of employees and vehicles, payroll size, and annual revenue. 

Securing properly structured policies with quality insurance carriers may allow you to achieve rates toward the lower end of the ranges provided in our benchmarking. If in doubt, it pays to have an expert review your program to identify potential savings. The specialists in our network can guide you through the process.

Now let’s take a closer look at typical costs for key contractor insurance policies in South Dakota.

General Liability Insurance Costs in South Dakota

South Dakota Average Premiums for General Liability

General liability, also known as CGL, protects your contracting business against third party claims alleging property damage or bodily injury caused by your operations, products, or services. 

LowHighAverage
Electrician
– Small$1,300$3,100$1,900
– Medium$3,500$8,500$5,400
– Large$5,700$15,500$10,200
Plumber
– Small$5,100$13,700$8,800
– Medium$14,600$31,000$24,000
– Large$24,200$72,700$51,100
Painter
– Small$1,600$3,800$2,100
– Medium$2,700$8,000$5,800
– Large$4,100$16,700$10,900
Landscaper
– Small$1,030$2,634$1,700
– Medium$3,286$6,944$4,400
– Large$6,277$12,618$8,500
Handyman
– Small$3,000$5,250$3,800
– Medium$10,200$15,300$11,000
– Large$18,900$26,000$22,300
Carpenter
– Small$2,900$6,500$4,200
– Medium$9,700$14,550$10,900
– Large$17,800$37,300$26,600
General Contractor
– Medium$5,100$16,400$8,100
– Large$8,800$24,200$13,700
– XL$25,500$76,900$45,400

For $1 million per occurrence limits, typical premiums range from 1% to 5% of gross revenue depending on risk factors particular to your business. Certain high-risk trades like roofing and plumbing may lean toward the higher end while lower risk contractors may track closer to 1% to 2%.

General Liability Premium Ranges

Contractor RevenuePremium Range
$150,000$1,500 – $7,500
$500,000$5,000 – $25,000
$1,000,000$10,000 – $50,000
$2,500,000$25,000 – $125,000

There are a number of key factors that can influence general liability insurance costs for contractors in South Dakota:

Type of work – Certain trades like roofing, plumbing, electrical, and demolition are seen as higher-risk activities by insurers, thus have higher GL rates. More hazardous work leads to increased liability costs.

Annual revenues – Contractors with higher gross revenues tend to pay more for liability coverage, as they have greater overall risk exposure. Insurers use revenue as a proxy for a business’s size and set premiums accordingly.

Claims history – Contractors with past liability claims filed against them, especially costly ones, will see their premiums increased significantly. Too many claims can even make obtaining coverage difficult. A clean claims history helps lower rates.

Years in business – Newer contractors are viewed as higher risk by insurers and will pay more until they build up their experience. Being in business for 5+ years often results in lower rates.

Risk transfer – Insured’s who transfer risk through requiring subcontractors to carry General Liability and Workers Comp helps reduce their own premiums.

Policy limits – Higher liability coverage limits mean higher premiums. Lower limits reduce premiums but leave you exposed for losses that exceed limits.

Deductibles – Choosing a higher deductible, the amount you pay out-of-pocket before insurance kicks in, can significantly reduce premiums.

Safety record – Contractors with strong safety programs and low OSHA violations/EMR rates often qualify for premium discounts. Poor safety increases costs.

Location – Urban contracting businesses typically pay more for insurance than rural contractors due to increased risk exposures.

Insurance company – The insurer’s financial strength, reputation, and competition level in your region impacts premium pricing.

Workers Compensation Insurance Costs in South Dakota

South Dakota Average Premiums for Workers Compensation

Workers’ compensation insurance covers employee injuries, lost wages, medical expenses, death benefits and rehabilitation services. Premiums for South Dakota contractors can vary significantly based on risk factors.

LowHighAverage
Electrician
– Small$1,184$2,590$1,480
– Medium$3,330$7,326$4,440
– Large$5,180$11,470$7,400
Plumber
– Small$1,614$3,531$2,018
– Medium$4,539$9,987$6,053
– Large$7,061$15,636$10,088
Painter
– Small$1,497$3,276$1,872
– Medium$4,211$9,265$5,615
– Large$6,551$14,506$9,359
Landscaper
– Small$1,112$2,433$1,390
– Medium$3,128$6,881$4,170
– Large$4,865$10,773$6,950
Handyman
– Small$3,319$7,260$4,148
– Medium$9,334$20,534$12,445
– Large$14,519$32,149$20,742
Carpenter
– Small$3,391$7,417$4,238
– Medium$9,536$20,980$12,715
– Large$14,834$32,848$21,192
General Contractor
– Medium$9,955$21,777$12,444
– Large$15,555$34,221$20,740
– XL$29,036$64,294$41,480

For contractors in South Dakota, typical workers’ comp premiums range from 2% to 10%+ of gross payroll. Certain high-risk trades like roofing and plumbing may fall above 6% while lower risk contractors may be below 3% of payroll. 

Workers’ Compensation Premium Ranges

Annual PayrollPremium Range
$50,000$1,000 – $5,000
$200,000$4,000 – $20,000
$500,000$10,000 – $50,000
$1,000,000$20,000 – $100,000

Many factors influence workers’ compensation costs for contractors in South Dakota:

– Total payroll amount – The higher your payroll, the higher your workers’ comp premium. Number of employees also contributes to total payroll exposure.

– Job classifications – The type of work performed by employees is classified into risk categories by the insurer. Higher risk occupations lead to higher base rates.

Experience modifier – Contractors are graded on past loss history. Firms with fewer/lower cost claims get an ‘experience credit’ that lowers premiums. High claims lead to a debit increasing premiums.

Industry trends – Market-wide loss trends in the construction industry influence pricing. Increased claims severity pushes costs up. New laws/regulations can also impact premiums.

Safety record – Strong safety programs and low EMR rates help achieve ‘safety certified’ status for premium discounts. Poor safety leads to increased premiums.

Use of subcontractors – Using uninsured subcontractors results in higher premiums to cover those worker exposures. Requiring subs to carry their own workers’ comp lowers a contractor’s premium.

Deductible program – Choosing a higher deductible for workers’ comp claims reduces premiums but increases out-of-pocket costs per claim.

Insurance company – The financial strength, service, expertise, and pricing of the insurance carrier impacts overall costs.

Additional Insurance Coverages and Typical Premiums

Beyond general liability and workers’ compensation, contractors in South Dakota need supplemental insurance policies to comprehensively protect their business. Common coverages include:

Commercial Auto Insurance

Covers vehicles used for business purposes like crew trucks and work vans. Typical premiums range from $1,000 to $3,000 per vehicle depending on factors like vehicle type, radius of operations, driver safety, and more.

Inland Marine (Equipment) Insurance

Protects equipment, tools, machinery, and materials on job sites and in transit. Typical premiums range from $1,000 to $7,500+ annually for coverage limits of $10,000 to $50,000 or more.

Builder’s Risk Insurance 

Covers construction projects under contract while they are underway. Premiums typically range from 0.3% to 2%+ of the completed contract value per project.

Surety Bonds

Required bid, performance and payment bonds for public works and many private construction projects. Typical premiums range from 1% to 3% of the bond amount based on business size, experience, and credit.

Cyber Liability Insurance

Responds to data breaches, hacking incidents, electronic theft and other IT security issues. Premiums normally range from $500 to $2,000+ annually for $500K to $1M coverage limits.

Commercial Umbrella Liability 

Provides additional liability limits above primary general liability and auto policies. Typical premiums range from $750 to $2,000+ annually per $1 million in additional coverage.  

Key Employee Life & Disability Insurance

Protects businesses against the financial loss of a key employee passing away or becoming disabled. Typical premiums range from $500 to $3,000 annually depending on benefits.

EPLI (Employment Practices Liability

Defends against employment-related lawsuits and claims. Typical premiums range from  $2,500 to $7,500+ per year based on number of employees.

Pollution Liability 

Covers defense and damage costs related to pollution incidents. Premiums start around $2,500 annually for $1 million in coverage.

Bundling multiple policies with the same carrier often allows contractors to realize discounts of up to 15% to 20%. But it is wise to still compare options.

Finding the Right Insurance for Contractors in South Dakota 

The key is working with an agent or broker who understands the unique risks and insurance needs of contractor businesses. They can accurately assess your exposures and tailor coverage.

When selecting insurance, be sure to evaluate the following:

Financial strength – Choose a carrier with strong financials rated “A” or higher by agencies like A.M. Best. This ensures they can pay out claims.

Industry expertise – Look for a provider with extensive experience covering construction risks in your state. They will understand your needs.

Coverage options – Ask potential insurers about specialized coverages like contractors equipment, builder’s risk, surety bonds, etc.

Risk control – Some insurers offer policy discounts for completing risk management initiatives like safety training.  

Cost – Obtain apples-to-apples quotes from multiple insurers. But don’t choose cost over adequate protection.

Customer service – You want an insurer who is responsive and makes the claims process smooth. Ask around.

Don’t leave anything to chance when it comes to protecting your South Dakota contracting business. Work with a trusted insurance advisor to customize your insurance program.

Partner with SouthDakotaContractorInsurance.com

Are you looking for an easy way to protect your South Dakota contracting business? We have you covered.

We make insuring your construction company simple through our dedicated team of specialists focused exclusively on South Dakota contractors. No more dealing with generic agents or wasting hours shopping quotes.

Our contractor-centric services include:

– Quick online quotes from top regional and national insurance carriers 

– Policy review and analysis by a South Dakota contractor insurance expert

– Risk control guidance to help reduce premiums 

– Competitive insurance rates tailored to your business  

– Streamlined purchasing and account management

Don’t leave your business exposed and don’t overpay for insurance. Partnering with us ensures you make a smart investment to safeguard your company’s future.

Get matched with your contractor insurance specialist today to discuss protecting your business the right way.