South DakotaWorkers' Compensation Insurance Requirements (2026)

What South Dakota Business Owners Need to Know

• •South Dakota requires coverage from the first employee

• ✓Medical treatment — doctor visits, hospital stays, surgery, prescriptions, and physical therapy for work-related injuries and illnesses
• ✓Temporary disability benefits — partial wage replacement (typically 66.67% of average weekly wage) while the employee recovers and cannot work
• ✓Permanent disability benefits — compensation for lasting impairments that reduce the employee's ability to work, rated by degree of disability
• ✓Vocational rehabilitation — retraining, education, and job placement assistance for employees who cannot return to their previous job
• ✓Death benefits — wage replacement payments to surviving dependents (spouse, children) if an employee dies from a work-related injury or illness
• ✓Burial/funeral expenses — a fixed amount to cover funeral and burial costs for work-related fatalities
• ✓Mileage and travel reimbursement — reimbursement for travel to and from medical appointments related to the injury

1. 1Determine if you need coverage — check your state's requirements based on your employee count, industry, and payroll. Even if not required, coverage is strongly recommended.
2. 2Get your NCCI classification code — your business activity determines your classification code, which directly impacts your rate. Make sure you use the correct code for each type of work your employees perform.
3. 3Gather your payroll data — insurers need your estimated annual payroll broken down by job classification. Accurate payroll figures are essential for correct premium calculation.
4. 4Get quotes from at least 3 carriers — compare pricing from multiple insurance companies. Include your state fund (if available) and private carriers. An independent agent can help you shop multiple carriers at once.
5. 5Review policy terms and compare — look beyond the premium. Compare deductible options, payment plans (annual vs. pay-as-you-go), claims handling reputation, and any included safety services.
6. 6Bind the policy and post required notices — once you select a carrier, bind coverage immediately. Post the required workplace notice informing employees of their workers' comp rights and your carrier's information.
7. 7Set up payroll reporting — many carriers offer pay-as-you-go billing tied to your actual payroll. This avoids large upfront deposits and reduces audit surprises at year-end.

1. 1Employee reports the injury — the employee should notify you (the employer) of the injury as soon as possible, ideally in writing. Document the details: what happened, when, where, and any witnesses.
2. 2Provide the claim form — give the injured employee the required state claim form (e.g., DWC-1 in California) within 24 hours of learning about the injury. Keep a signed copy for your records.
3. 3Report to your insurer — notify your workers' comp insurance carrier immediately, typically within 24-48 hours. Most states require employer reporting within 3-10 days. Late reporting can result in penalties.
4. 4Direct the employee to medical care — send the employee to an approved medical provider or your Medical Provider Network (MPN). In emergencies, the employee can go to the nearest emergency room.
5. 5Insurer investigates and decides — your insurance carrier will investigate the claim, review medical records, and make a determination on coverage. They may accept, deny, or request additional information.
6. 6Manage the claim and offer modified duty — stay in contact with the injured employee. Offer modified or light-duty work when medically appropriate. This reduces claim costs and helps the employee recover.
7. 7Complete the return-to-work process — once the employee is cleared by their doctor, facilitate their return to full duty. Document the return and any work restrictions. Ensure the claim is properly closed with your carrier.

Official South Dakota Resources

• SD Workers' Compensation