In the state by state Total Loss series, I last blogged about North Dakota. This week, it makes sense for me to focus on the state of South Dakota.
I have never traveled to South Dakota, but would like to someday. Although I don’t quite see myself riding a Harley into Sturgis for the annual Sturgis Motorcycle Rally anytime soon, a visit to Mount Rushmore has greater probability.
Just like its neighbor North Dakota, South Dakota has a “valued policy” statute which requires insurance companies in the event of a total loss to pay the amount written in the policy. The statute in South Dakota’s Codified Laws provides in pertinent part:
Whenever any insurance policy is written or renewed to insure any real property in this state, including structures on land owned by a person other than the insured, against loss by fire, tornado, or lightning and the property insured is wholly destroyed, without criminal fault on the part of the insured or the insured’s assigns, the amount of insurance written in the policy shall be taken conclusively to be the true value of the property insured and the true amount of the loss and measure of damages . . .1
In my research of South Dakota law on what constitutes a total loss, although I found cases that affirm that in the event of a total loss, an insurer in South Dakota must pay the whole sum insured in the policy, I did not come across any authorities that address the applicable standard.
If you are familiar with this Total Loss series, then you will know that essentially there are two standards — the "identity" test and "prudent person" test. If South Dakota indeed has not formally adopted a standard, then one could possibly argue that either may apply or that the state can look to its neighboring states for guidance. Since South Dakota’s valued policy statute is practically identical to North Dakota’s statute, or vice versa, then perhaps South Dakota will follow North Dakota’s approach which appears to be using a combination of both standards. Remember that under the "identity" test, the focus is whether the building is so much destroyed that it has lost its character or identity and under the "prudent person" test, the consideration is whether it is reasonable under the circumstances to rebuild.
1 S.D.C.L. 58-10-10.