The Dram Shop Dilemma: How South Carolina’s Liability Laws Are Crippling Local Businesses
By Crime and Cask
In recent years, South Carolina’s hospitality industry has faced a growing crisis: the rapid rise in insurance costs for local bars, restaurants, and venues. These escalating costs are not only threatening the survival of individual businesses but are also reshaping the state’s entire hospitality landscape. Establishments once known for lively music, weddings, and celebrations now find themselves struggling to stay afloat. At the heart of this crisis lies South Carolina’s strict dram shop liability laws, which have become a double-edged sword for the industry.
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ToggleThe Garden Café: A Case Study in Crisis
A prime example of this issue is The Garden Café, a beloved establishment that has served its community for 29 years without a single insurance claim. Despite its spotless record, the café has been hit hard by the rising premiums. After being rejected by eight different insurance companies, The Garden Café managed to secure coverage—but at a steep price. No longer able to host music events or weddings, the café had to remove its dance floor, a once-popular feature, to meet insurance company demands.
The Garden Café: Photo Facebook
This situation is becoming all too common in South Carolina. Businesses like The Garden Café are struggling to maintain operations as insurers increasingly view them as high-risk due to the state’s Dram Shop Liability laws, which hold establishments accountable for serving intoxicated patrons who later cause harm. The passage of the South Carolina Dram Shop Act (S. 1175) has only made matters worse by expanding the liability of bars and restaurants.
Why Insurance Costs Are So High
There are several factors contributing to the dramatic rise in insurance premiums for South Carolina’s bars and restaurants:
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Dram Shop Lawsuits: Establishments are held accountable for accidents involving intoxicated patrons, leading to an increase in claims. Insurance companies view these businesses as high-risk due to the potential for costly lawsuits.
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Rising Legal and Healthcare Costs: The cost of settlements and medical expenses in alcohol-related cases has skyrocketed, and insurers are passing these costs on to policyholders.
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Increased Regulation: The South Carolina Dram Shop Act places more responsibility on businesses, requiring them to ensure patrons are not intoxicated. Even patrons who appear sober can later cause harm, leaving establishments vulnerable to lawsuits.
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Reduced Availability of Coverage: Fewer insurance companies are willing to provide liability coverage to businesses that serve alcohol, especially those that host events. This limited competition allows the remaining companies to charge exorbitant rates.
The Impact on the Hospitality Industry
The effects of these rising costs are profound. Businesses that once thrived on live music, weddings, and celebrations are now forced to scale back or close their doors. The Save SC Small Venues & Small Businesses- Address the Insurance Crisis, a coalition advocating for reform, has become a hub for business owners seeking change.
The owner of The Garden Café captured the severity of the situation in a recent statement:
“We can no longer host weddings or music groups at our pavilion. Insurance companies are scared to write liability policies for venues, bars, and restaurants, and those who can find coverage are facing unsustainable cost increases. Without change, many more businesses will close.”
Palmetto Bros Dispensary: Closing Message: Facebook
Legislative Solutions: Hope for 2025
The hospitality industry is pushing for legislative reform. Business owners are calling on lawmakers in Columbia to reconsider dram shop laws and seek a balanced solution that protects both the public and responsible businesses. Caps on damages in dram shop lawsuits have been introduced in other states with some success, offering businesses a lifeline by reducing the risk of catastrophic payouts.
The root of the problem dates back to the passage of the Dram Shop Bill in 2017, which mandates that businesses serving alcohol must carry a $1 million liability insurance policy. Over the years, insurance premiums have surged, forcing bars and music venues across the state to shut their doors.
In response, a grassroots organization called the SC Venue Crisis emerged in 2023, aiming to raise awareness and push for legislative change. “Our main objective was to educate the public because many in South Carolina don’t realize the severity of this issue until it directly impacts them,” said Sheila Merck, a spokesperson for the movement.
Despite promising initiatives, such as the SC Justice Act and the SC Save Our Venues Act, along with discussions to lower or suspend the $1 million liability requirement, none of these measures reached Governor Henry McMaster’s desk for approval.
In states like Texas, for instance, tort reform has helped businesses manage liability costs by capping non-economic damages, which has created a more stable insurance market. Advocates in South Carolina are hoping for similar reforms in 2025.
The Role of High-Profile Lawsuits
The issue of dram shop liability has gained attention through high-profile cases, such as those involving attorney Mark Tinsley, who represented the family of Mallory Beach after the tragic accident involving Paul Murdaugh. These cases, which often result in multi-million-dollar settlements, place additional strain on the insurance market and highlight the potential financial ruin that businesses face.
Why Caps Haven’t Been Implemented in South Carolina
There are several reasons why South Carolina has not implemented caps on dram shop liability:
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Strong Lobbying by Trial Lawyers: Attorneys handling personal injury cases often oppose caps on damages, as it could limit compensation for victims and reduce potential fees for lawyers.
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Public Sentiment for Victims: In cases involving serious injury or death, public opinion tends to favor large settlements for victims, making it politically challenging to limit damages.
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No Prior Legislation on Dram Shop Caps: While South Carolina has passed tort reform in other areas, such as medical malpractice, the state has not yet addressed dram shop liability in the same way.
What’s at Stake for South Carolina’s Venues?
Without legislative reform, the future of South Carolina’s hospitality industry looks bleak. Bars, restaurants, and venues that have been part of the local fabric for decades are now at risk of closing. The current liability framework, combined with rising insurance costs, is unsustainable for many businesses.
South Carolina’s hospitality industry is a major contributor to the state’s economy, ranking among the top states most dependent on this sector. In 2022, the state saw a record-breaking $29 billion in tourism-related economic impact, driven by destinations like Charleston and Myrtle Beach, which are popular among tourists for their historical charm and coastal attractions. This sector supports roughly one in every ten jobs in South Carolina, highlighting its significant role in employment as well.
Despite this, rising insurance costs tied to the state’s dram shop liability laws are putting immense pressure on bars, restaurants, and venues. Here is a list of current businesses that have closed due to the high costs. These businesses are heavily reliant on events and alcohol sales, yet face growing challenges in securing affordable insurance due to the perceived high risks associated with serving alcohol. The strain on these businesses is particularly concerning, given the importance of hospitality to South Carolina’s overall economic health.
How You Can Help
Supporters of the hospitality industry can visit Save SC Small Venues & Small Businesses- Address the Insurance Crisis on Facebook to learn more about how to get involved. Advocating for change and supporting local businesses in this time of need is crucial to preserving the venues that make South Carolina’s communities vibrant. Or visit SC Venue in Crisis for their recommendations on helping solve this problem.
In conclusion, while South Carolina’s dram shop laws aim to protect the public, they are having an unintended consequence on the state’s beloved businesses. Reform is needed to strike a balance between protecting patrons and preserving the local venues that have become integral to South Carolina’s cultural landscape. Until then, the fate of many cherished establishments remains uncertain.