The South Dakota Legislature is considering a bill that would establish a statutory 75% minimu
m damage threshold for declaring a vehicle a total loss, which insurers say could negatively impact drivers through increased premiums and reduced road safety.
Senate Bill 227 passed the Senate and is being considered in the House Transportation Committee this week.
The American Property Casualty Insurance Association opposes the bill, arguing that total loss claims decisions should be guided with the goal of safe, quality repairs t
o address individual circumstances. APCIA says SB 227 replaces that flexibility with a hard rule that could undermine safety and could drive-up costs.
According to the group, rigid repair thresholds often increase disputes over valuation and repair estima
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tes and slow claims processing. Mandated repairs could also increase the expenses associated with paying claims, and drive up insurance costs for South Dakota drivers, according to APCIA.
Wilson said physical damage costs have increased 47% over the last five years due, in part, to higher used car prices during the pandemic. That inflationary dynamic “ha
s started to reverse, which will improve affordability,” but bodily injury claims have increased 52% over the last five years “due to attorney involvement and higher settlements.”
The litigation reform enacted by some states (Florida, New York, Louisiana and Georgia were specifically call out by Wilson) has shown benefits. “Other states are starting to get this,” Wilson said.