South Carolina Bars Push for Overhaul of Liquor Liability Policy
Introduction
Bars and restaurants based in South Carolina face an unsavory dilemma as liquor liability insurance policies in the state continue to inflate year after year. The soaring rates pose significant financial burdens for small business owners, who are being forced to reconsider their operational models just to keep their establishments afloat.
Current Scenario
Every business in South Carolina that serves liquor past 5 p.m. is required by law to have a liquor liability insurance policy worth at least $1 million. This stipulation applies to all establishments, including those solely serving beer and wine. Business owners in the region have been repeatedly emphasizing the unsustainable nature of the rising liability insurance costs. Insiders indicate that the existing system, which was originally intended to regulate and curb establishments overserving their patrons, has resulted in a high-risk climate turning away insurers.
Insurance Industry Woes
The unprofitability factor in the liquor liability insurance market is seemingly at its peak. According to a study released by the state Department of Insurance in January, insurers are losing an average of $1.77 on each dollar in premiums earned since 2017; losses have even exceeded the 200% mark in some years. The insurance industry in South Carolina seems to be dealing with more and bigger payouts than any other southeastern state. Despite evidence of considerable losses, insurance companies continue to offer liquor liability policies. This paradoxical situation has led some industry insiders to speculate that high rates could partly be due to lax regulations allowing insurance companies to capitalize on market volatility. However, the Insurance Association posits that competition in an open market is the most effective form of regulation.
Impact on Businesses
The escalating insurance rates are directly affecting the bottom line of businesses all over the state. The exorbitant costs are compelling business owners to either scale down their operations or, in extreme cases, close down altogether. For the businesses that manage to stay operational, securing an affordable insurance policy is akin to hitting a jackpot. The insurance crisis has gotten to a point where a long-standing law that put limitations on circumstances in which one party in a multi-defendant civil lawsuit would be mandated to pay the total verdict amount, is being re-evoked. The alcohol-related exemption to this rule is particularly worrisome for businesses, where an establishment serving alcohol can be held entirely responsible for damages in a lawsuit even if they were only found to be partially culpable.
Potential Solution
One possible resolution is suggested in Senate Bill S.533, or the SC Justice Act, which aims to overturn the alcohol-linked exception to South Carolina’s joint and several liability laws. If enacted, this bill would determine liability in incidents involving businesses serving alcohol and assign the commensurate fault levels. However, this move, known as tort reform, is not without its critics who question the effectiveness of such a measure in controlling insurance premiums. They argue that this could potentially reduce the damage liabilities awarded to victims of drunk driving accidents. Instead, they push for a more stringent implementation of existing alcohol serving regulations and stricter adherence to DUI laws to prevent incidents that lead to lawsuits in the first place.
Conclusion
The South Carolina bar and restaurant landscape finds itself in a precarious position – torn between the need to keep their establishments running smoothly and complying with state regulations. While it is indeed crucial to safeguard the rights of victims and prevent establishments from encouraging reckless drinking, the burden on business owners running establishments responsibly is undeniably significant. A middle ground that balances regulation with practical affordability for businesses is the pressing need of the hour for South Carolina.
