South Carolina lawmakers pass reform easing liquor insurance law

A bipartisan agreement in the South Carolina Statehouse on Tuesday reshaped a nearly decade-old liquor liability insurance law that recently has caused financial hardship for some locally owned bars and restaurants, forcing many across the state to shut their doors.

Since 2017, the Dram Shop Bill has required establishments in South Carolina that sell beer, wine or liquor past 5 p.m. to hold $1 million in liquor liability insurance. The law was enacted as part of the state’s efforts to help combat drunken driving.

At issue is skyrocketing premiums as many of the policies have been up for renewal, leaving smaller establishments in the lurch with having to cover costs of premiums that in some instances have doubled, tripled, or even more.

The late-session agreement between the South Carolina House of Representative and the South Carolina Senate, after months of back-and-forth debate, offers some relief to businesses serving alcohol, enacting joint and several liability for alcohol-influenced incidents.

“We are very appreciative that the house passed meaningful legislation last night and hoping the senate does the same today. We are oh so close to getting some relief,” said Keith Benjamin, owner of Uptown Hospitality Group, which owns Uptown Social, Bodega and Share House, all in Charleston.

As it stood, if establishments serve alcohol to a person who later gets into a drunken accident, they are highly likely to be at fault under the Dram Shop Bill. This inherent risk has caused the number of insurance companies offering liquor liability insurance to dwindle, which, in turn, is causing premiums to rise drastically, according to Benjamin.

Restaurants and bars really started feeling the pinch in 2023, with many deciding to close due to the steep increase in liquor liability insurance costs.

“I’ve heard rates have gone up anywhere from 100 to 1,000% across the state of South Carolina depending on the nature of the business,” Benjamin said.

That’s why the bills were facing such scrutiny. Bill 3497 and bill 244 avoid bars being to blame for 100% of the losses of drunken accidents that are out of their control. The bills will also require stricter training for people serving alcohol. 

Bill 3497 and bill 244 cleared the final hurdle on Tuesday in the House, with negotiators reaching an agreement in the Senate.

“We are on the same team as those who want to keep the general state of South Carolina safe,” Benjamin said. 

With tourism generating $13 billion for Charleston’s economy each year and the hospitality industry being a vital cog in that economic engine, losing more businesses to rising insurance costs risked a major impact, Benjamin said. 

“Why would you want to visit here if the town has a bunch of empty storefronts?” Benjamin said. “You’d rather go to a state where the economy is thriving, the restaurant and bar scene is thriving, the hotel scene is thriving, not a state where one in every three restaurants and hotels have to close because they can’t afford insurance.” 

The National Federation of Independent Businesses also expressed its appreciation for the agreement, saying in a news release that it is a vote of a “growing lawsuit abuse crisis” in the state.

“This agreement brings long-overdue relief and legal clarity for small businesses facing rising insurance premiums and unreasonable exposure to liability,” Ben Homeyer, NFIB state director, said in the release. “For too long, small business owners have been disproportionately punished by a broken system that allows them to be blamed for more than their share of responsibility.”

Charleston Mayor William Cogswell said the struggle was not only an issue of business being able to stay afloat, but with the culture of Charleston’s hospitality scene, it posed a ripple effect for the city’s economy. 

“I have been really supportive of the efforts of both the House and the Senate to get something done to get relief to these small businesses,” Cogswell said.  

Gov. Henry McMaster also called for urgency on the joint and several liability portion of bar insurance in his May 5 tort reform remarks.  

“We must be sure that those injured receive full compensation for those injuries, but not at the expense of those not responsible for those injuries,” McMaster said.  

Benjamin, who is also part of the Responsible Hospitality Reform Alliance, which was created as an advocacy group for restaurant and bar owners, emphasized safety.

“We don’t want people to get hurt. We don’t want people to be irresponsible. We want to serve people in a safe fashion,” Benjamin said. “We want people to have a great experience within our four walls, and then we want those people who have had a drink or two, to take an Uber, to take a taxicab, to walk.”

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