58-10-1      Application to all insurance and annuity contracts--Exceptions.
58-10-2      Policy defined.
58-10-3      Procurement of insurance on own life or body for benefit of another--Interest required for insurance on life or body of another.
58-10-4      Insurable interest in personal insurance defined.
58-10-5      Insurance benefits recoverable from beneficiary without insurable interest.
58-10-6      Consent of insured required for life or health insurance on an individual.
58-10-6.1      Assignment of incidents of ownership under life insurance policy--Assignment before July 1, 1989, enforceable.
58-10-7      Insurance of property--Insurable interest required.
58-10-8      Insurable interest in property defined.
58-10-9      Measure of insurable interest in property.
58-10-10      Insurance against fire, tornado, or lightning--Measure of damages where property wholly destroyed.
58-10-11      Change of property interest on death of insured.
58-10-12      Transfer of property interest between joint insureds.
58-10-13      Trust defined.
58-10-14      Business trust defined.
58-10-15      Trust to be governed by South Dakota law.
58-10-16      Retroactive effect of statutory provisions regarding trusts.
58-10-17      Creation of entity to purchase, hold, or administer insurance contract on life of individual settlor.

58-10-1. Application to all insurance and annuity contracts--Exceptions.

Chapters 58-10 to 58-12, inclusive, apply as to all insurance contracts and annuity contracts, other than:

(1)    Reinsurance;

(2)    Policies or contracts not issued for delivery in this state or not delivered in this state, except as provided in §§ 58-11-12 to 58-11-20, inclusive.

Source: SL 1966, ch 111, ch 22, § 1 (1), (2); SL 1967, ch 129, § 6.

58-10-2. Policy defined.

"Policy" means the written contract of or written agreement for or effecting insurance, by whatever name called, and includes all clauses, riders, endorsements, and papers which are a part thereof.

Source: SL 1966, ch 111, ch 22, § 2.

58-10-3. Procurement of insurance on own life or body for benefit of another--Interest required for insurance on life or body of another.

Any individual of competent legal capacity may procure or effect an insurance contract upon his own life or body for the benefit of any person. But no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or his personal representatives, or to a person having, at the time when such contract was made, an insurable interest in the individual insured.

Source: SL 1966, ch 111, ch 22, § 4 (1).

58-10-4. Insurable interest in personal insurance defined.

Insurable interest with reference to personal insurance includes only interests as follows:

(1)    Interests in individuals related closely by blood, marriage, or by law, a substantial interest engendered by love and affection;

(2)    For other persons, a lawful and substantial economic interest in having the life, health, or bodily safety of the individual insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement, or injury of the individual insured;

(3)    A person who is a party to a contract or option for the purchase or sale of an interest in a business partnership or firm, or of shares of stock of a closed corporation or of an interest in the shares, has an insurable interest in the life of each individual party to the contract and for the purpose of the contract only, in addition to any insurable interest which may otherwise exist as to the life of the individual;

(4)    A charitable organization that meets the requirements of section 501(c)3 of the Internal Revenue Code of 1986, as amended to January 1, 1992, and owns or purchases life insurance on an insured who consents to the ownership or purchase of the insurance has an insurable interest in the life of the insured;

(5)    A financial institution, as defined in subdivision 10-43-1(4), to whom a debt is owed has an insurable interest in the life of the insured to the extent of the debt owed by the insured, irrespective of any statute of limitation regarding the enforceability of the debt;

(6)    The trustee of a trust established by an individual settlor has an insurable interest in the life of that individual settlor, and has the same insurable interest in the life of any other individual as does such individual settlor. However, the settlor must be the insured or have an insurable interest as required by subdivisions (1) to (5), inclusive, of this section. The trustee of a trust has the same insurable interest in the life of any other individual as does any beneficiary of the trust with respect to proceeds of insurance on the life of such individual or any portion of such proceeds that are allocable to such beneficiary's interest in such trust. If multiple beneficiaries of a trust have an insurable interest in the life of the same individual, the trustee of such trust has the same aggregate insurable interest in such individual's life as such beneficiaries with respect to proceeds of insurance on the life of such individual or any portion of such proceeds that are allocable in the aggregate to such beneficiaries' interest in the trust. A trustee of a business trust has the same insurable interest in the life of any individual as does any beneficial owner in any individual or any beneficial owners in the aggregate in any individual.

Source: SL 1966, ch 111, ch 22, § 4 (3); SL 1989, ch 423, § 1; SL 1992, ch 343; SL 2000, ch 237, § 1; SL 2006, ch 251, § 1.

58-10-5. Insurance benefits recoverable from beneficiary without insurable interest.

If the beneficiary, assignee, or other payee under any contract made in violation of § 58-10-3 receives from the insurer any benefits thereunder accruing upon the death, disablement, or injury of the individual insured, the individual insured or his personal representative, as the case may be, may maintain an action to recover such benefits from the person so receiving them.

Source: SL 1966, ch 111, ch 22, § 4 (2); SL 1995, ch 167, § 188.

58-10-6. Consent of insured required for life or health insurance on an individual.

No life or health insurance contract upon an individual, except a contract of group life insurance or of group or blanket health insurance, shall be made or become effective unless at the time of the making of the contract such individual applies therefor or has consented thereto in writing, except in the following cases:

(1)    A spouse may effectuate such insurance upon the other spouse.

(2)    Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and maintenance, may effectuate insurance upon the life of or pertaining to such minor.

(3)    Family policies may be issued insuring any two or more members of a family on an application signed by either parent, a stepparent, or by a husband or wife.

Source: SL 1966, ch 111, ch 22, § 9.

58-10-6.1. Assignment of incidents of ownership under life insurance policy--Assignment before July 1, 1989, enforceable.

Subject to the policy terms on assignment, a person whose life is insured under a policy of life insurance may assign with his spouse's written consent any or all incidents of ownership granted him under the policy, including but not limited to any right to designate a beneficiary or to pay premiums. If a policy of life insurance has been issued in conformity with this section, no transfer of the policy or any interest thereunder shall be invalid by reason of a lack of insurable interest of the transferee in the life of the insured or the payment of premiums thereafter by the transferee. Insurance contracts which were assigned before July 1, 1989, shall be deemed enforceable under this section.

Source: SL 1989, ch 423, § 2.

58-10-7. Insurance of property--Insurable interest required.

No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.

Source: SL 1966, ch 111, ch 22, § 6 (1).

58-10-8. Insurable interest in property defined.

"Insurable interest" as used in §§ 58-10-7 and 58-10-9 means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment.

Source: SL 1966, ch 111, ch 22, § 6 (2).

58-10-9. Measure of insurable interest in property.

The measure of an insurable interest in property is the extent to which the insured might be directly damnified by loss, injury, or impairment thereof.

Source: SL 1966, ch 111, ch 22, § 6 (3).

58-10-10. Insurance against fire, tornado, or lightning--Measure of damages where property wholly destroyed.

Whenever any policy of insurance 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 loss and measure of damages, with the following conditions:

(1)    This section applies only if a total fire loss occurs ninety days or more after the policy was made or written or ninety days or more after the policy limits were increased by twenty-five percent or more at the insured's request. However, within the first ninety days, payment to the insured shall be in accordance with the terms and conditions of the policy for valuation of the property absent stated amount;

(2)    Subdivision (1) of this section does not apply to unchanged renewal policies, to policies with inflation adjustment limits or to policies which are being converted to replacement cost coverage from a lesser value form and upon which there is a written agreement between the company and the insured that the policy will be written on a valued basis;

(3)    Builders' risk policies of insurance covering property in the process of being constructed shall be valued and settled according to the actual value of that portion of the construction completed at the time of the fire, tornado, or lightning loss;

(4)    Property in the process of being newly constructed for the purpose of serving as a residence, other than property covered by a builder's risk policy, shall be valued and settled according to the terms and conditions of the policy for valuation of that portion of the construction completed at the time of the fire, tornado, or lightning loss;

(5)    If two or more policies are written upon the same property interest, each insurer shall pay only that proportion of the cost of the loss that the limit of liability under its policy bears to the total amount of insurance covering the loss;

(6)    Any claim for loss of an appurtenant structure or other appurtenant property covered under the policy shall be settled for actual replacement or actual cash value, depending on the policy provisions applicable to the structure or other property, unless a specific value was assigned to each structure or property prior to the loss; and

(7)    This section does not apply to any claim for total loss to any building which is insured under a commercial blanket form with one amount covering two or more buildings. Any claim for total loss to a building so insured shall be settled for actual replacement or actual cash value depending on the policy provisions applicable to the building.

Source: SL 1966, ch 111, ch 22, § 5; SL 1967, ch 136; SL 1985, ch 389; SL 1995, ch 277; SL 1997, ch 285, § 1; SL 1999, ch 247, § 1; SL 2009, ch 258, § 1.

58-10-11. Change of property interest on death of insured.

A change of interest, by will or succession, on the death of the insured, does not avoid an insurance of property and the insurance passes to the person taking his interest in the thing insured.

Source: SL 1966, ch 111, ch 22, § 7.

58-10-12. Transfer of property interest between joint insureds.

A transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid an insurance of property even though it has been agreed that the insurance shall cease upon an alienation of the thing insured.

Source: SL 1966, ch 111, ch 22, § 8.

58-10-13. Trust defined.

For purposes of subdivision 58-10-4(6), the term, trust, includes any trust, including a business trust, and the term, beneficiary, includes the interest of any beneficiary in a trust, including a beneficial owner of a business trust.

Source: SL 2006, ch 251, § 2.

58-10-14. Business trust defined.

For purposes of subdivision 58-10-4(6), the term, business trust, means a business trust subject to chapter 47-14A or chapter 47-14B.

Source: SL 2006, ch 251, § 3.

58-10-15. Trust to be governed by South Dakota law.

An insurance contract for which an insurable interest exists under subdivision 58-10-4(6), is a life insurance policy issued for delivery to a trust governed by South Dakota law.

Source: SL 2006, ch 251, § 4.

58-10-16. Retroactive effect of statutory provisions regarding trusts.

The provisions of subdivision 58-10-4(6) and §§ 58-10-13 to 58-10-15, inclusive, are effective retroactively to November 2, 1889.

Source: SL 2006, ch 251, § 5.

58-10-17. Creation of entity to purchase, hold, or administer insurance contract on life of individual settlor.

A person who has an insurable interest in the life of an individual settlor pursuant to subdivisions 58-10-4(1) to (6), may create an entity solely for the purpose of purchasing, holding, or administering an insurance contract on the life of the individual settlor. Neither an insurance policy issued to the entity nor any ownership interest in the entity itself may be sold or voluntarily transferred to any entity other than one with an insurable interest in the life of the same individual settlor pursuant to subdivisions 58-10-4(1) to (6). For purposes of this section, entity, has the same meaning as the definition of, person, in subdivision 58-1-2(14).

Source: SL 2015, ch 247, § 1.