by DIANE HARDY
If you enjoy live music at a local venue, having a drink at your neighborhood pub or relaxing with a glass of wine at a winery, you may be interested in a recent issue in South Carolina that is making it very difficult for these businesses to stay open.
A perfect storm of factors has caused liability insurance costs for businesses which serve alcohol to suddenly skyrocket – if they are lucky enough to find an insurance carrier that will offer them a policy at all.
A recently formed group called “SC Venue Crisis” is working hard to raise awareness of this issue – and to help these small businesses to stay open. This group has been sounding the alarm about this issue by holding town hall meetings throughout the state. They recently provided our organization – The Mom and Pop Alliance of SC – with the following context for how we got here:
- In 2014 a drunk driver crashed into a police car in Dillon S.C., killing a passenger and severely injuring officer Jacob Richardson. The nightclub which served the driver had no insurance – and passed its liability on to the city. Dillon was forced to pay over $1 million while the nightclub didn’t pay a dime.
- From this, a new law (Act 45 of 2017) was passed which required businesses serving alcohol after 5:00 p.m. to carry a minimum $1 million liquor liability policy. This paved the way for even more liability lawsuits. When Act 45 took effect, the average price of a liability policy was between $5,000 and $6,000. By 2020 the average rate had soared to anywhere between $20,000 and $25,000. Today, music venues struggle to find rates below $60,000, even without a single claim on their policy. Some bars can’t find coverage for less than $100,000 per year.
While liability costs have increased for all venues and restaurants (contributing to higher prices for patrons), the venues taking the biggest hit are those with a higher ratio of alcohol sales to food – or establishments which have later hours. In some cases, their insurance premiums have quadrupled because it is just too risky for insurance companies to offer this type of coverage in South Carolina. While larger venues and national chains might be able to absorb these increased premiums, smaller mom and pop establishments are being especially impacted.
The new $1 million mandatory minimum coverage is only part of the problem. South Carolina is also in desperate need of tort reform. We need to adopt proportional liability in the Palmetto State – meaning that each defendant is only held liable for their assigned portion of damages based on their percentage of liability. As it stands now regarding alcohol sales, the defendant often bearing full financial responsibility is the one with the deepest pockets and the best insurance coverage – even if they were only minimally responsible for the loss.
Many states have adopted proportional liability, a much fairer system which would cut down on the frivolous lawsuits contributing to rising premiums and insurers pulling out of our state.
We also must ensure liability rests only with an establishment that knowingly served someone who was clearly intoxicated. As it stands now, multiple establishments can be sued for an accident/ injury involving someone they served – even if it happened hours earlier at a time when the individual displayed no clear signs of intoxication.
Also contributing to successful frivolous lawsuits is a longstanding trend in our nation of a growing lack of personal responsibility. This sense of victimhood has contributed to a marked decrease in accountability for one’s own actions such that it is now acceptable to blame others and have them bear the burden for mistakes they didn’t commit. While we may not be able to fix this piece of the problem anytime soon, there are things South Carolina can do to right some of the wrongs in our system and protect small business owners from being unfairly put out of business.
Attempts in the legislature to rectify these problems – and create a fairer system for everyone – are underway, but getting them passed and signed into law will require active citizen involvement. S.C. Senate president Thomas Alexander sponsored a bill (S.533) to reform South Carolina’s civil liability laws by allowing damages to be paid relative to the share of fault (i.e., proportional liability).
Passage of this law would help to bring much needed relief to the small business owners whose livelihoods are being threatened by the current unjust system.
Meanwhile, state representative Stewart Jones, upon hearing from many venue owners last June, filed the “Save Our Venues Act” (H. 4529). This bill was modeled after one in Alabama, a state with a lower mandatory minimum of coverage for venues serving alcohol and which contains clear language that one must knowingly serve to an intoxicated person. It also provides tougher penalties on those who violate the law.
These sudden skyrocketing insurance premiums not only hurt restaurant and venue owners but have trickle-down impacts on countless others such as musicians, servers, managers and distributors – not to mention all customers via the aforementioned price increases imposed to cover the increasing insurance costs.
The Mom and Pop Alliance of SC – along with the “SC Venue Crisis” folks – will be working hard to provide a stronger voice in our State House for small business owners who are being unfairly impacted by our outdated and, in our opinion, unjust system of assessing liability. We hope citizens will see the need for reform and will contact their state legislators to voice their support of proportional liability and a lowering of the mandatory minimum coverage.
You can find you state legislator by clicking here.
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Diane Hardy is a former nurse anesthetist turned entrepreneur, who opened a franchise at Verdae in Greenville over five years ago. She is executive director of the Mom and Pop Alliance of SC, which she founded during Covid upon discovering South Carolina’s almost 400,000 small businesses had little representation in our State House. The Alliance provides education, communication, and advocacy for SC’s family-owned businesses. Her passion for South Carolina’s small business is strong, and as such she donates her time to the organization, accepting no salary or government funding. Her love for our state isn’t new. Before launching the Mom and Pop Alliance she was the founder and host of The Palmetto Panel (2014-2019), an annual statewide conference highlighting issues impacting South Carolina. Diane has a bachelor’s degree in nursing and psychology from Michigan State as well as a master’s degree from MUSC.