South Dakota Legisture Considering Auto-Related Bill That Could Reduce Safety and Increase Consumer Costs

PIERRE, S.D. - The South Dakota Legislature is considering a bill (Senate Bill 227) that establishes a rigid statutory 75 percent minimum damage threshold for declaring a vehicle a total loss, which could negatively impact South Dakotans through increased premiums, reduced road safety, and more. SB 227 passed the Senate and is being considered in the House Transportation Committee on Feb. 24, 2026. The American Property Casualty Insurance Association (APCIA), the primary national trade association for home, auto, and business insurers, opposes the bill.

"If passed, Senate Bill 227 would change how total-loss auto claims are handled in South Dakota and could threaten road safety and could result in higher auto insurance premiums for South Dakotans," said Brooke Kelley, assistant vice president of state government relations at APCIA. "Total loss claims decisions should be guided with the goal of safe, quality repairs and flexibility to address individual circumstances, but SB 227 replaces that flexibility with a hard rule that could undermine safety, consumer choice and could drive-up costs."

Potential Consequences of Senate Bill 227

Unsafe Vehicles Could Remain on the Road

• Auto claims decisions require careful evaluation of structural integrity, safety systems, and overall crashworthiness, yet SB 227 could force repairs even when serious safety concerns remain. This could allow for unsafe vehicles to stay on the road, threatening overall driver and road safety in South Dakota.

More Disputes, Slower Claims Processing, Higher Premiums

• Rigid repair thresholds often increase disputes over valuation and repair estimates, slowing claims processing, and harming the customer experience. Mandated repairs that are economically inefficient also increase the expenses associated with paying claims, which could drive up insurance costs for South Dakota drivers.

Weakened Anti-Fraud Protections & Restricted Consumer Choice

• The bill may weaken anti-fraud protections by limiting appropriate total-loss determinations, allowing improperly repaired vehicles to reenter the market and increasing opportunities for abuse. It also restricts consumer choice, as many policyholders prefer total-loss settlements in some cases for safety, speed, or personal reasons.

"APCIA, on behalf of our members who write over 57 percent of auto insurance in South Dakota, are extremely concerned about the potential impact of SB 227. We urge lawmakers to preserve road safety, consumer choice, and protect against rising costs by voting no on SB 227."