SC Bill, Passed by House, Would Let Captives Solve the Liquor Liability Squeeze

April 8, 2024 by

With one month left in the South Carolina legislative session, two bills designed to ease liquor liability insurance costs are evolving and moving forward.

The state House of Representatives late last month voted 106-2 to approve House Bill 5066, which was changed significantly after it was introduced in February. The initial measure would have established a liquor liability fund financed by an excise tax on drinks, but that idea was removed in the House Judiciary Committee and members added a new plan: Allowing establishments to set up their own captive insurance companies, which would provide at least half of the needed liability coverage.

The bill, sponsored in part by Rep. Jason Elliott, R-Greenville, would keep the state’s controversial requirement that bars and restaurants maintain at least $1 million in liquor liability coverage. Hospitality groups have said for months that the liability requirement, mandated in 2017, is a big reason behind soaring insurance premiums and a dearth of insurers willing to write that much.

But the amended bill, if approved by the Senate and signed into law, would tweak the wording. Instead of a total coverage of $1 million, the amended bill would mandate an annual aggregate limit of $1 million. It also would allow that coverage amount to be cut in half if owners undertake a mitigation program, which includes certified training of serving staff.

Also, “Insurers must establish liquor liability mitigation measures and offer premium discounts for compliance therewith that reduce the risk to the general public associated with the service of on-premises consumption of alcohol,” HB 5066 reads.

To comply with the mitigation plan, the earlier version also would have required bars and restaurants to stop serving booze at 10 p.m. and keep alcohol sales below 30% of total revenue, something some bar owners in the tourism-heavy state said would be impossible. The amended bill changes the hours to midnight and raises the alcohol-sales limit to 40%.

Bars and restaurant owners also have complained that South Carolina’s joint-and-several liability law has worked in tandem with the liquor liability coverage requirement to send premiums bubbling over in the last few years. Senate Bill 533 would allow juries to apportion fault, potentially reducing the amount of damages a bar owner may face after negligently serving alcohol to a person that later caused an accident.

That bill, after seeing little action for more than a month, was approved by the Senate Judiciary Committee March 27 and could be voted on by the full Senate this week.