South Dakota Workers’ Compensation

One of the unique things you may discover before starting a business in South Dakota is that it doesn’t have laws that require companies to carry Workers’ Compensation insurance. However, this fact doesn’t mean that you shouldn’t get coverage. The South Dakota Department of Labor and Regulation highly encourages businesses to purchase this type of insurance, to help avoid huge financial losses.

How does South Dakota Workers’ Compensation insurance work? PolicySweet® has shared what you might want to know about policies and the state’s process. Keep reading to learn more or get in touch with us to get a quote.


Why Is Workers’ Compensation Insurance Important?

Even though you might not be doing anything illegal by not having Workers’ Compensation insurance, you could be exposing your company to potential financial loss and legal issues. Injured workers can still get compensation for damage they may have suffered while on the job.

If you’re not covered by an insurance plan, then you may have to pay the claim out of pocket, which could result in major financial loss, especially for small businesses. Workers’ Compensation insurance can help pay for these expenses, so your company can avoid financial trouble.

South Dakota Workers’ Compensation: Things to Remember

Unlike other states, South Dakota has a more distinctive approach to Workers’ Compensation insurance. Here are some of the most important things to remember.

  • Insurance May Not Be Required but Highly Encouraged: As mentioned, South Dakota doesn’t have laws mandating companies to purchase Workers’ Compensation plans. However, getting coverage is still highly recommended, so that businesses may not have to shoulder Workers’ Compensation claims by themselves.

  • Where To Get Coverage: Unlike neighboring North Dakota and a few other states, South Dakota is not monopolistic when it comes to Workers’ Compensation insurance. Employers can purchase a plan from a commercial carrier, such as PolicySweet. The state government also has the South Dakota Workers’ Compensation program, which can help pay for medical and disability benefits, as long as an employer is part of it.

  • Penalties: There are no penalties for not having a Workers’ Compensation insurance policy since you may not be required to have it. However, there may be fines and other stiff consequences for employers who are unable to help cover an injured employee’s damages or fail to report an injury within a timely manner.

  • Exceptions: There are no exceptions for who should get Workers’ Compensation insurance since it may not be required for a business. However, there are certain employees that could be exempt from benefits. You may be allowed to not provide compensation for independent contractors, real estate agents, and other similar roles.

South Dakota Workers’ Compensation: Coverage and Benefits

The South Dakota Workers’ Compensation laws may require a business to provide compensation for injuries that resulted from:

  1. Accidents/Work-related Injuries: Slips and falls, getting injured by equipment, and burns from hot surfaces are examples of injuries under this classification.
  2. Repetitive Stress Injuries: These issues can stem from repetitive motion a worker experiences while performing their roles, such as strain in the back or cramping hands.
  3. Exposure/Work-related Illnesses: Also known as occupational exposure injuries, these problems can develop from constant exposure to harmful or toxic substances.

If a worker files a claim for injuries, they may be entitled to the following benefits after settlement with you, the employer:

Medical Coverage

A Workers’ Compensation plan can help cover the costs of medical services and hospitalization for injured employees. These expenses can include surgical procedures, prosthetic devices, and physical rehabilitation.

Lost Wages

Some accidents can prevent an injured worker from returning to work right away. They could be entitled to benefits to help cover their lost wages so they can focus on recovering.

Rehabilitation and Restraining Benefits

Employees who are unable to return to their former roles because of an injury or disability can be entitled to rehabilitation and retraining benefits, including vocational training and job placement.

What Do Workers’ Compensation Plans Not Cover?

Workers’ Compensation insurance plans usually only cover economic damages, such as the ones outlined above. Non-economic damages, like pain and suffering, might not be covered unless outlined specifically in the plan.

Aside from non-economic damages, an employer may not be liable for a worker’s injuries stemming from the following scenarios:

  • The worker intentionally failed to follow company safety protocols and policies.
  • The worker purposefully failed to operate equipment and machinery properly.
  • The worker was under the influence of controlled substances at the time of injury.
  • The worker instigated violence that resulted in their injury.
  • The injury happened off-site and after the employee’s work hours.
  • The injury happened after the worker’s contract had ended.

Help Insure Your South Dakota Business with a Policy

Even though it may not be required by law, South Dakota Workers’ Compensation insurance can be an important requirement you might want to accomplish, before starting a business. If you’re looking for a plan that can cover your needs, PolicySweet can help. We’ve worked with various businesses in South Dakota, including those in industries like cleaning, landscaping, and retail.

Ready to get insured and help protect your company from financial losses? Contact us today to get your quote.

Please Note: State-specific information is subject to change at any time. Always consult with your state’s official information and resources for the most accurate information.