South Carolina’s Liquor Liability Insurance Crisis: Impact on Businesses and Legislative Efforts
The landscape of South Carolina’s hospitality industry has been significantly impacted by the state’s joint and several liability law and the 2017 mandate requiring a minimum $1 million liquor liability insurance policy for businesses serving alcohol past 5 p.m. This has led to skyrocketing insurance rates, forcing many establishments to close their doors.
Historical Context and Legislative Background
In 2017, South Carolina passed legislation requiring bars and restaurants to maintain at least $1 million in liquor liability insurance. This law aimed to protect victims of alcohol-related incidents but has resulted in unintended consequences for business owners. The high insurance premiums are a direct result of the joint and several liability statute, which can hold a business fully responsible for damages even if it is only partially at fault (Upstate Business Journal) (Claims Journal).
Joint and Several Liability Explained
Joint and several liability is a legal doctrine that can hold multiple parties accountable for the same event or act and make them all responsible for the entire amount of the judgment. In practice, this means that if several businesses are found liable for an incident, each one can be held responsible for the full amount of damages awarded, regardless of their individual share of the fault.
Example of Joint and Several Liability
Consider a scenario where a patron visits multiple bars in one evening and becomes excessively intoxicated. If that patron later causes a car accident, under joint and several liability, any of the bars that served the patron could be held liable for the entire amount of the damages awarded to the victims of the accident, even if one bar only served a single drink. This creates a substantial risk for businesses, as they might be held fully responsible for an incident in which their involvement was minimal.
Impact on Insurance Premiums
The high insurance premiums in South Carolina are a direct result of this joint and several liability statute. Insurance companies, anticipating the possibility of being held responsible for large settlements, increase their rates to mitigate potential losses. Consequently, bars and restaurants face escalating insurance costs, which can be financially devastating and lead to business closures (Upstate Business Journal) (Claims Journal) (FITSNews) (Insurance Journal).
Impact on Businesses
The financial strain on businesses has been severe. For instance, a bar owner in Myrtle Beach saw their insurance costs increase from $55,000 in 2022 to $145,000 in 2023. Similarly, a Columbia restaurant owner’s premiums surged from $30,000 to $150,000 within a year. This escalation in costs has led to the closure of several establishments, including Smiley’s in Greenville, where insurance costs jumped from $6,000 in 2020 to $22,000 in 2022 (Upstate Business Journal) (Business Insurance).
Notable Closures Across South Carolina
Several notable businesses have been impacted:
- Smiley’s Acoustic Café, Greenville
- Transmission Arcade and Bar, Columbia (considering closure due to unsustainable insurance rates) (WLTX)
- Blind Horse Saloon, a popular country music venue in Greenville, closed after almost 30 years (Insurance Journal)
- Henry’s Restaurant & Bar, Cayce, announced its pending closure (Insurance Journal)
- Pinky’s Revenge Bar and Arcade, Taylors, struggling with rising costs (Business Insurance)
- Tribble’s Bar and Grill, Piedmont, facing potential closure due to insurance increases (Business Insurance)
Legislative Efforts
Recognizing South Carolina’s liquor liability insurance crisis, South Carolina legislators have proposed several bills to address the issue. The South Carolina Justice Act (S-533) seeks to apportion damages according to the percentage of fault, potentially reducing the burden on businesses (Greenville Journal) (WLTX). Additionally, a House bill aims to incentivize more insurance companies to offer liquor liability coverage and lower insurance mandates for certain establishments (WLTX).
Other proposed bills include:
- Senate Bill 533: The South Carolina Justice Act, which would allow juries to apportion fault in more cases, reducing the burden on individual businesses (Upstate Business Journal) (Claims Journal).
- House Bill 5066: Proposes a state fund to cover some of the liability coverage costs and would allow establishments to set up their own captive insurance companies to provide at least half the coverage (Insurance Journal).
While legislative solutions are being discussed, the hospitality industry is urging immediate action. Without reform, more businesses may face closure, impacting the state’s economy significantly, especially in tourism-dependent areas like Charleston and Myrtle Beach (Upstate Business Journal) (Claims Journal) (Business Insurance).
Legal Support and Resources
For business owners navigating these challenges, expert legal support is crucial. At South Carolina Attorneys at Law, we specialize in Alcohol Law and our Counsel On Call Concierge Legal Service™ which is a straightforward and affordable monthly solution that assures you access to expert legal and business counsel to help you manage these complexities effectively. Our team provides personalized guidance and robust legal strategies to protect your business from undue financial strain and liability risks.
Whether you need assistance with alcohol licensure, understanding current legislation, navigating insurance mandates, or advocating for legislative reforms, our experienced attorneys are here to support you every step of the way. Don’t let high insurance rates and legal complexities jeopardize your business. Contact South Carolina Attorneys at Law today to ensure your establishment remains compliant and protected.
Conclusion
The joint and several liability law, combined with the 2017 insurance mandate, have created a significant burden for South Carolina’s hospitality industry. Legislative reforms are essential to ensuring the survival and growth of these businesses. Stay informed about ongoing legislative efforts and seek legal counsel to navigate these challenging times.