COLUMBIA, S.C. — As the cost of insurance required to serve alcohol continues to soar, South Carolina lawmakers are actively seeking solutions to alleviate the burden on bar and restaurant owners across the state.
Josh Baumgardner, owner of Transmission Arcade and Bar, testified in front of lawmakers this week, expressing deep concern over the escalating insurance rates plaguing his establishment.
"Our insurance rates started at $6,000, then $15,000, and then $45,000 and now $65,000," said Baumgardner. "I have to make a decision in June if I want to resign my lease and it's not looking great, to be a realist."
Baumgardner isn't alone. Many establishments are feeling the pinch of exorbitant insurance costs. They have said the financial strain can be traced back to a 2017 state law mandating businesses serving alcohol past 5 p.m. to carry at least $1 million in liquor liability insurance.
State legislators are now actively seeking solutions to address this crisis.
A House bill currently under consideration aims to incentivize more insurance companies to provide liquor liability coverage. Additionally, the proposed legislation would lower insurance mandates for bars and restaurants meeting specific criteria, such as nonprofit status or closing by 10 p.m.
"We need to find a way to lower premiums by bringing carriers back into the marketplace, and that's what we want to do," remarked State Rep. Jason Elliot.
Susan Cohen, president and CEO of the South Carolina Restaurant and Lodging Association, told legislators Thursday she appreciates them trying to help.
"We don't want to see victims not be compensated. we feel like they need to be compensated by the guilty party. Otherwise, you are going to continue to create a second level of victims and that's these small businesses that cannot afford to stay in business," said Cohen.
However, not all lawmakers agree on the root cause of the issue. Some argue that the problem lies within a state law holding bars and restaurants fully responsible for any damages in civil cases, irrespective of their level of involvement in the incident.
"My recommendation would be to revise that statute to allow a portion or allocation of fault to anyone who actually had fault," said Civil Defense Attorney Jay Thompson.
A Senate bill aims to fix that.
"I'm not interested in adjusting our liquor liability laws," stated State Sen. Dick Harpootlian, who's working to shape legislation in that chamber. "I'm interested in making sure the insurance companies differentiate between a dive bar selling $1 shots and a restaurant serving food with alcohol. And that's not happening."
Jay Angoff, a former insurance commissioner, believes the issue is more complex. According to the state Department of Insurance, insurance companies were consistently paying out at least $1.90 for every dollar they collected between 2017 and 2022.
Twyla Reynolds, whose family members were tragically impacted by a drunk driver, testified against the proposed bill.
"1 in 3 South Carolinians is impacted by drunk drivers in their lifetime," Reynolds emphasized. "There's never been a worse time to consider loosening the responsibilities of those who might put drunk drivers on our roadways and then calling it the justice act of all things."