What’s a Person Got to Do to Get a Drink in South Carolina? Bars, Eateries Closing for Lack of Affordable Liability Coverage

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. A million-dollar liquor liability 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.

“It’s just out of hand. It’s a crazy thing,” said Tom Bates, market president of the Stokes-Farnham Insurance Agency in Greenville. “I’ve tried to go to the standard market first, but if you have any kind of hair on your account, you have to go to the excess and surplus market.”

Bates told the story of a locally-owned, popular wing restaurant. Liquor sales are only about 30% of the restaurant’s total sales, well below the 50% alcohol sales threshold that would trigger the liability coverage. But because the eatery had a claim recently, carriers have become leery. Five standard carriers have declined to write a policy, and the wing place can’t afford the much-higher E&S lines’ premiums.

The wing shop is now about to go out of business, Bates said.

Others across the state are in 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 $1 million minimum liquor liability coverage is not unusual. Several states, including Florida, have statutes requiring that much or more.

But in South Carolina, insurance had never been required by law before 2017. Some dram shops carried it; others did not.

“Any time you have coverage that was an option that then becomes a mandated coverage by law, it’s either going to keep you in business or put you out of business,” Bates said. “And it’s putting a lot of people out of business right now.”

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. In June, 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.

Also this year, the famous saga of convicted South Carolina attorney Alex Murdaugh and his family included a convenience store chain agreeing to pay $15.5 million to settle a civil lawsuit. Parker’s Kitchen, near Charleston, was shown to have sold beer to Murdaugh’s underage son in 2019. The youth, Paul Murdaugh, showed the identification card of his similar-looking, older brother. Paul then crashed a boat into a bridge, killing a 19-year-old girl who was thrown from the craft. Three insurers will pay the bulk of the settlement.

“The application of the joint and several liability laws in South Carolina meant that, if Parker’s was found even 1% at fault, it would have paid for the entirety of any verdict rendered against the Murdaugh family,” the attorney for Parker’s told the Associated Press in July.

And litigation is on the rise. Perkins Coie, a law firm that tracks class-action lawsuits, said in August that 214 suits were filed against food and beverage companies in 2022 and 101 were filed in the first six months of this year. In 2010, just 45 suits were filed, the Associated Press reported.

All of the above appear to have created a perfect storm in South Carolina, making a number of insurance companies non-renew many policies, raise premiums for others, or pull back from the market altogether.