Sioux Falls, SD Short-Term Rentals: Insurance Requirements (2026)

Sioux Falls operates under a home-rule charter (SDCL Chapter 6-12) and could, in principle, condition an STR business license on proof of liability insurance — but the city has not enacted an STR licensing ordinance, so no insurance requirement exists. STR hosts in Sioux Falls are not required to: carry general-liability insurance, name the city or any city department as additional insured, file a Certificate of Insurance with Planning or Code Enforcement, or post a damage deposit or surety bond. This is consistent with South Dakota's broader light-touch regulatory posture: SDCL Title 58 (Insurance) does not impose any STR-specific insurance mandate, and there is no statewide STR licensing framework. Hosts should be aware, however, that standard South Dakota homeowner policies (HO-3, HO-5) typically exclude or sharply limit "business pursuits," which most carriers interpret to include short-term rental income. Landlord policies (DP-3) cover rental dwellings but are usually written for long-term leases and may not cover transient occupancy. Many SD hosts rely on Airbnb's AirCover (which provides up to $1 million in host liability and $3 million in host damage protection) or Vrbo's Liability Insurance (up to $1 million). These platform-provided policies are secondary to the host's primary homeowner policy in most cases — a coverage gap that hosts should discuss with a licensed South Dakota insurance producer.