Many South Carolina restaurants, bars have closed because of skyrocketing insurance rates — here’s the 2017 liquor law behind the spike in costs and how a new senator is pushing to amend it

Laws and effect

Why are the rates soaring now? The issue stems from the 2017 law requiring all businesses that serve alcohol after 5:00 p.m. to carry at least $1 million in liquor liability coverage.

The legislation was intended to ensure that victims of alcohol-related incidents could receive compensation. However, it has also driven up insurance costs for business owners. Many insurance companies have either exited the South Carolina market or raised their rates, making it challenging for small establishments to afford the required coverage.

Why is the impact hitting businesses now? Most insurance policies renew annually, meaning rate hikes happen gradually, not all at once. As insurers reassessed risk and adjusted pricing over time, premiums steadily climbed — until they became unsustainable for many bars and restaurants.

Zach Dennis, owner of the bar Peacock and an insurance agent, has seen both sides of the issue.

"I have clients right now whose renewals are coming through that, for the first time, have to answer the question: Do I renew my insurance, or do I close my doors? Because I cannot continue to make money or operate in this economy." Dennis shared.

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Lawmakers and the fix

In response to this crisis, Sutton has introduced a bill to amend the current liquor liability laws. The proposed changes would refine liability standards and shift the burden of proof to focus on clear, observable signs of intoxication rather than imposing blanket liability. This could reduce financial risks for responsible establishments while still allowing victims to seek damages. Sutton said he hopes this will lead to lower insurance rates for businesses.

"We need to land in a spot where rates aren’t $100,000 for a liquor liability premium, but also allow for victims of operators that overserved, don't check IDs, or don't do the proper thing for those victims to be compensated,” Sutton said, emphasizing the need for balance. “And I absolutely believe we can get there."

Another proposal seeks to reduce the mandatory insurance coverage from $1 million to $250,000 for establishments that implement specific risk mitigation measures, such as comprehensive server training programs.

Sutton's bill has gained support from the hospitality industry and business community, who see it as essential to preventing closures and preserving South Carolina's vibrant culinary scene. He plans to have the legislation on the governor's desk by May.

However, for some businesses, the changes may come too late. The Brew Cellar plans to close its doors on February 17, just two days after its 11th anniversary.

Hendrick urged patrons to support their local establishments before it's too late, "We're not going to beg for people to come through to keep our doors open, but go support your favorite places; they need it."