Deal with liquor liability insurance crisis at bars, restaurants

Imagine being at work today — literally minding your own business (a bar) — when you learn that in three days, your liability insurance is going to go up six times — from $17,000 a year to more than $100,000 annually.

Wouldn't you fall out of your seat, hitting your jaw on the floor so that you'd need to crack a beer just to calm down?

That's about the situation Charleston businessman Chris DiMattia faced last week with one of his new businesses, The Lucky Luchador. It's a nothing-fancy neighborhood bar that most people walk to. In the last year, it's had no claims, no lawsuits, no problems. Same for another nearby bar owner, who saw premiums rise from about $7,700 in 2017 to more than $48,000 this year. Same for bar and restaurant owners from Myrtle Beach to Hilton Head Island to Greenville to Rock Hill.

DiMattia says the problem for fellow venue owners could have serious negative ramifications for businesses that depend on tourism, the state's largest industry.

"If the bars can't get insurance, they lose their liquor licenses," he explained. And if you don't have any night life, you lose out on all of that tourism. You won't see the weddings coming here to Charleston or the corporate events or general tourists coming in for dining, food and beverage. These are the people who stay in all of the hotels."

In the last six years, state lawmakers changed a liquor liability law to require venue owners — bars, restaurants and clubs that serve alcohol after 5 p.m. — to have at least $1 million in liability insurance. And during the period came some lawsuits in which several bars were sued at once in injury cases to spread liability — and the potential for increased financial recovery for those injured. In turn, insurance companies turned skittish and started leaving the state. The number offering liquor liability insurance reportedly has dropped from two dozen to just three causing, in part, a huge rise in rates.

DiMattia and others around the state have been squawking to state lawmakers, who essentially caused the problem by rewriting the liability law just a few years ago.

State Rep. Stewart Jones, R-Laurens, filed a last-minute bill, the S.C. Save our Venues Act, in June to address some of the grievances and try to get things straightened out. But once a law changes, there's never a quick fix. The bill by Jones was way too late for anything to happen this year. Another measure in the state Senate by Sen. Thomas Alexander, R-Oconee, would cure some issues, but it's standing still, too, for now.

While Alexander couldn't be reached for comment, Jones said his bill would address three main issues that should make life easier for hospitality businesses. It would review the mandatory $1 million insurance minimum, look at curbing frivolous lawsuits and try to reduce rates based on proximity to emergency services.

"There's been a good discussion on how to fix these problems," Jones said. "There's probably going to be a new bill filed when we get back in session in January" that will be an overhaul of current rules.

"I think the way these rates have gone up, especially recently, that it's reached an emergency critical point," he said. "I wish there was a way to get something going sooner. … Unfortunately there's not a silver bullet."

And while the legislature may make reforming liquor insurance requirements a top-level priority in January, changing the law won't cause an immediate drop in rates for bar owners. Why? Because with only a handful of insurance companies left that provide coverage, it will take awhile to draw in those that left to help make rates more affordable via old-fashioned competition.

Let's hope the General Assembly makes liquor insurance reform a priority that helps venue owners, but also protects the public from anyone who has been irresponsibly overserved.