Bar owners struggle as legislators search for solutions

Soaring liquor liability insurance costs continue to challenge — and outrage — bar owners across South Carolina. But the quick fix many were hoping for from the General Assembly appears to have gotten bogged down in the perennial legislative battle over lawsuit reform.

The question now facing bar owners is whether they can find a way to keep their doors open while the major players in that long-running “tort reform” debate — insurance companies, large corporations, trial lawyers and victims advocates — duke it out in the state legislature. And for many bar owners, the answer to that question could well be no.

Struggling Bar Owners

“Unless I’m able to pull some sort of a magic rabbit out of a hat, we may be going down in the next two weeks,” Joe Clarke of Forte’s Jazz Lounge in Charleston said in an interview this week. Clarke, who notes that he’s never had a claim against his liquor liability policy, said he’s seen his premiums skyrocket from $6,000 in 2019 to $32,000 today, with the best quote so far for his upcoming March renewal currently at $42,000.

Still, like many others in the industry, Clarke is considering every option to stay open, including the possibility of taking out a loan to cover the cost of insurance. “I’m a little too dumb to quit, I think,” he said. “I’m just very passionate about what we’re trying to do here, which is bring live jazz and local musicians up on stage so people can get a taste of the real musicianship we have to offer in Charleston.”

Legislative Battle

Supporters of the stalled legislation — S. 533, or the S.C. Justice Act — argue that bars in South Carolina are required to carry a minimum $1 million liquor liability policy. But because South Carolina law allows bar owners to be hit with 100% of the cost of a jury verdict in drunk driving lawsuits — even if they were found to only be 1% responsible for the harm caused by the drunk driver — insurance companies that provide this liability coverage have been losing money.

Several companies have opted to leave South Carolina, too, winnowing the number of insurers to a handful. The proposed solution is to reform the system so that bar owners, like most other civil defendants in South Carolina, can only be held responsible for the percentage of harm that they were found to have caused. This is what the bill aims to do.

Opposition Viewpoints

Opponents of the legislation see it differently. They argue that shifting the financial loss from the insurance company onto the victim of the drunk driver is unfair. While sympathetic to the plight of bar owners, opponents stress the need to protect victims’ rights and question the impact of reforms on innocent individuals affected by drunk driving incidents.

Steven Burritt, Executive Director of S.C. Mothers Against Drunk Driving, believes that the focus should be on addressing high DUI rates in South Carolina to prevent drunk driving incidents and ultimately reduce the need for such extensive liability coverage.

A New Approach

New legislation introduced in the S.C. House of Representatives, H. 5066, takes a different approach. Dubbed the Fair Access to Insurance Act, the proposal aims to use existing liquor excise taxes to fund state-subsidized liquor liability policies for South Carolina bar owners. This model mirrors the state’s medical malpractice insurance system, created to assist doctors in managing rising insurance costs in the 1970s.

While most bar owners remain cautious about solutions that don’t directly address the 1-percent rule, they are open to approaches that balance concerns for victims’ rights with the need to alleviate financial burdens on small businesses.

Conclusion

With costs continuing to rise and fewer insurance options available, bar owners find themselves in a precarious position. Legislative debates persist as the industry seeks solutions to maintain operations in the face of mounting insurance expenses.