The cost of liquor liability insurance in South Carolina has continued to rise, causing restaurants, bars and venues across the state to close or worry about whether they can remain open.
One reason is the SC Contribution Among Tortfeasors Act, under which multiple defendants can be held completely liable for a plaintiff’s injuries. Additionally, the General Assembly passed, and Gov. Henry McMaster signed, the Dram Shop Bill in 2017, requiring establishments that serve beer, wine or liquor on premises after 5 p.m. to carry at least $1 million in liability insurance.
With that bill, the General Assembly responded to drunk driving accidents, including one involving an uninsured bar. Since the Dram Shop Bill’s enactment, the state has seen fewer insurance companies willing to write liquor liability policies, and hospitality business owners are now experiencing significantly higher costs of insurance.
Several bills introduced last legislative session would have addressed liability and cost issues, but none passed. The House Judiciary Committee formed a Liquor Liability Ad Hoc Committee to hear from representatives of the hospitality industry. In January and February 2024, business leaders from across the state testified before the committee about their experiences.
Carl Sobocinski, president of Table 301 Restaurant Group in the Upstate, testified that his group’s insurance rates had risen 86%, and that he felt fortunate that the increase was not higher. Sobocinski added that another Upstate bar’s annual premium had jumped from $8,000 to $54,000 within two years. A co-owner of Transmission Arcade in Columbia testified their insurance rates started at $6,000 per year in 2020 and are now $65,000 annually, and that under the $65,000 policy, the insurance company will only pay $25,000 of any potential claim.
Following numerous meetings, former SC Representative and now SC Senator Jason Elliott sponsored H5066 to address the issue. The bill would have provided an affordable option for liquor liability insurance and allowed for reductions in the amount of liability coverage required if businesses complied with risk mitigation measures. It also would have reduced the coverage needed by nonprofits or special events to $500,000, and provided for a state trust fund to help reduce premiums. The bill passed at the committee level and overwhelmingly on the House floor by a vote of 102 – 2.
The SC Senate did not take up H5066, but instead focused on their own bills. The main Senate bill, S533, would have changed joint and several liability in the SC Contribution Among Tortfeasors Act and allowed the courts to consider percentages of fault among tortfeasors. S533 failed on the Senate floor.
Because this remains a critical issue for small businesses across South Carolina, the General Assembly created an Insurance Study Committee that met throughout the fall. SC Senate Majority Leader Shane Massey told The State newspaper that legislation on joint and several liability should be expected this year. The Municipal Association of South Carolina supports the hospitality industry’s efforts to resolve this burden on small businesses.
Liquor liability insurance will be one of the legislative issues discussed during the Municipal Association’s Hometown Legislative Action Day on January 21. Find the full agenda and details.