SC Bars and Restaurants Closing in Face of Rising Liability Insurance Costs

Wanted in South Carolina: $1 million in liquor liability coverage at an affordable premium to prevent closure of establishment.

That’s the type of advertisement one can imagine bars and bistros across the Palmetto State running this fall, as the full impact of state laws become painfully clear. The mandatory liquor insurance requirement, along with South Carolina’s joint-and-several tort statute that can hold a dram shop liable for millions in damages – plus the result of some recent high-profile lawsuits – has had insurance agents and brokers scrambling to find coverage for some of the state’s favorite watering holes and restaurants.

Many across the state are in the same position. According to local news reports, insurance leaders and restaurant trade representatives. Some establishments have said their premiums have more than tripled, to as much as $350,000 a year for a relatively small bistro, said Susan Cohen, president of the South Carolina Restaurant and Lodging Association. News reports have quoted other bars as saying that their rates increased by 10-fold.

The issue began in 2017, when the South Carolina General Assembly mandated the million-dollar minimum following a car crash by a drunken driver that killed two people and severely injured a police officer. Neither the driver nor the drinking establishment had liability insurance, leaving the officer’s county employer to pay the medical expenses.

Few at the time realized what an impact the law would have on mom-and-pop bars and restaurants.

The hospitality industry also has long complained about South Carolina’s joint-and-several statute, which can hold a business mostly responsible for damages even if it was only peripherally involved. Some states have modified their liability and tort laws. The Florida Legislature this year, for example, drastically limited what a plaintiff can recover in a lawsuit if the plaintiff is shown to be partly responsible.

South Carolina’s joint liability law was highlighted this year by two well-publicized cases. One of these instances was in June, where a woman was charged with felony DUI and reckless homicide after she crashed her car into a Charleston woman who had just been married. The driver’s blood-alcohol level was three times the legal limit, authorities said.

Four drinking and eating establishments are now being sued for their role in providing alcohol to the driver, although it has yet to be shown which bar actually caused the intoxication, according to Cohen and local news reports.

“It affects multiple lines of insurance,” said Frank Sheppard, president of the Independent Insurance Agents and Brokers of South Carolina.

Even if more palatable liability laws or regulations are put in place, those may not be enough to bring down liability premiums, Bates, the Greenville agent, said. He has called for a type of state-backed, assigned-risk fund or association, perhaps similar to residual workers’ compensation insurance funds that cover hard-to-insure businesses in some states, or wind associations that cover vulnerable homeowners that can’t find coverage in the primary market.