SC bars, restaurants grapple with skyrocketing liquor liability costs

Bar and restaurant owners talk about it like its some sort of metaphorical boogeyman. A would-be Michael Myers, the infamous horror film villain, lurking just ahead, around the corner, waiting to strike.

"It's coming for everybody," said Phill Blair, the owner of West Columbia's popular WECO Bottle & Biergarten.

Steve Cook, who owns Columbia's Saluda's fine dining establishment and the Five Points Mexican eatery Arroyo, among other restaurants, likens it to the storied Sword of Damocles, hanging over the heads of restaurateurs, growing closer with each passing year.

The "it" in this scenario is liquor liability insurance, and it's a topic that has increasingly been on the tongues of bar, restaurant and venue owners across South Carolina in recent years, as rates for the insurance have continued to climb.

A state law passed in 2017 requires establishments that sell beer, wine or liquor for on-premises consumption to carry at least $1 million in liquor liability insurance. In the law's wake, restaurateurs say some insurers have left the market in South Carolina in the last several years, thereby limiting the number of carriers they can use. Subsequently, many restaurateurs and bar owners have seen liquor liability insurance rates skyrocket.

For instance, Blair says that, at WECO — an outdoor beer garden on Meeting Street that serves craft brews that are typically enjoyed by customers on its outdoor lawn — liquor liability insurance rates have risen from $13,000 annually to $70,000 annually in the last four years.

And Blair said it was a battle to find that $70,000 policy. He notes that WECO is not a party bar, and has not had any claims related to alcohol.

"We had to fight tooth and nail to find a $70,000 policy for [2024]," Blair told The State "And that's with nothing happening. No claims against us. We are just low-key trying to exist. ... I'm carrying extremely expensive liquor liability insurance, and I don't sell liquor. I sell beer and wine and I close at 10 o'clock."

For Cook, the Columbia restaurateur and member of the SC Restaurant and Lodging Association's executive committee, the realities of liquor liability insurance are having an impact.

At Saluda's, the hightone fine dining establishment he has long run on Saluda Avenue, Cook says he has seen his liquor liability insurance rates quadruple in the last four years. While he has been able to shoulder the costs, he is quick to note that not every business is able to handle such increases.

"It is money out of your pocket that you can't use to do things like give raises or expand your business," Cook said. "There's a Sword of Damocles hanging over all of our heads. With a smaller and smaller pool of insurers, it's just natural that the prices are going to go through the freakin' roof."

Now Cook says he is seeing the eff ects of South Carolina's liquor liability laws creeping into the frame as he is working to launch a new business.

Cook and several partners are in the process of opening a new high-end steakhouse at the corner of Main and Church streets in downtown Lexington, in the spot that formerly was home to Alodia's. That restaurant is set to open in early 2025.

But Cook said they are having to work hard to find an insurer to give coverage for the Lexington restaurant. He recently got word that an insurance company that had, for years, covered Saluda's, won't even bid on the coming Lexington steakhouse. The reason? Liquor liability.

'Killing the mom-and-pops'

Across Lexington's Main Street from the coming steakhouse sits Keg Cowboy, the venerable craft beer hub and restaurant that has been run by Brian Nelson for the last 10 years. Nelson can often be found in Keg Cowboy's small rear kitchen, cooking pizzas or making the eatery's housemade cheese, or out in the bar area glad-handing with regular customers.

And like many restaurateurs in South Carolina the last several years, he often has one eye on liquor liability insurance rates.

Nelson said he has not yet had to deal with an overly exorbitant hike in rates, but gave credit to his broker for "going to bat" for him to find a rate that is workable as he moved from one carrier to another.

"If I had stayed with the same carrier, mine would have gone from $9,000 to $27,000," Nelson told The State during a December interview at Keg Cowboy.

Nelson said he has a friend in the restaurant industry whose premiums were $110,000 for last year.

"Can you imagine having to pay $10,000 a month for insurance?" Nelson said. "That's a nut. There's no way to make that money back."

Across South Carolina in the last two years, a number of restaurants have closed that have cited rising liquor liability as a central reason. There was, for instance, the Blind Horse Saloon in Greenville, which shuttered in May 2024 after 29 years in business. Meanwhile, downtown Greenville's Velo Fellow closed in December after 14 years, citing rising liability costs as a main reason for shuttering. And there was the Old Rock Quarry Winery in Enoree, which shuttered in August, noting on its website that it wasn't surviving the "current liquor liability insurance crisis our state lawmakers have allowed to ravage our state."

And venues that are still holding on are grappling with the price of insurance. Owners of longstanding local rock club New Brookland Tavern, which moved from West Columbia to Five Points in December 2023, detailed to The State in a September story that the tavern had to pay $70,000 in insurance for the year, with an $18,000 down payment.

"It's really killing the mom-and-pop places," Cook said.

Is a legislative fix possible?

Restaurateurs for the last couple of years have called upon state legislators to take action to help quell the increasingly high cost of liquor liability policies.

Aside from the fact that bars and restaurants open after 5 p.m. are tasked by state law with carrying at least $1 million in liquor liability insurance, there is the compounding issue that rises from an exemption in the state's joint-and-several liability laws. Through that scenario, if there is an alcohol-related incident, a bar or restaurant could be sued and found responsible for the entirety of damages in a case, even if it was only partially responsible.

"Consider a scenario where a patron visits multiple bars in one evening and becomes excessively intoxicated," notes an entry on liquor liability from website scattorneysatlaw.com. "If that patron later causes a car accident, under joint and several liability, any of the bars that served the patron could be held liable for the entire amount of the damages awarded to the victims of the accident, even if one bar only served a single drink."

Despite widespread discussion, state lawmakers did not pass legislation tackling the liquor liability crisis during last year's session. A piece of legislation attempting to address the issue — the Fair Access to Insurance Requirements bill — was overwhelmingly approved by the House, but ultimately was not approved by the Senate.

Ahead of the 2025 legislative session, which starts Tuesday, a joint study committee of legislators has been meeting to examine insurance issues, including liquor liability. State Rep. Micah Caskey, a Lexington County Republican, is a member of that study committee.

Caskey said he expects liquor liability is an issue that will be taken up by the House in 2025, though how that will ultimately look hasn't yet been detailed. He notes he has heard from a number of restaurant and bar owners about the issue in the last year.

"Anecdotally, it's clear that insurance rates for alcohol liability have gone up drastically," Caskey told The State.

The Lexington County lawmaker and attorney said the committee has sought data to try to determine whether the liability insurance crisis has risen to an existential level for the statewide restaurant industry.

"What is the rate of closures due to alcohol liability policy increases? Is that rate higher than normal?," Caskey said. "Can we prove that empirically? That's not to discount each individual story. Anybody's individual experience is important. But when we are doing statewide policy, what does the data say about the alcohol at on-premises businesses?"

For his part, Cook notes that there are certain hidden data points, if you will, in terms of restaurants that choose not to set up shop in South Carolina to begin with, because liquor liability is so steep.

"I think it discourages people from entering this market," Cook said. "We don't have any data on this, because how in the world could you get it, but I know for a fact that there are people who have looked at expanding restaurants and franchises into South Carolina and said, 'Nah, we aren't going to do it.'

"There is no data for what is missing or what never comes. That's the hidden thing that people don't see."

Blair said he has taken note of closures of restaurants statewide, many of which cite liquor liability as a main reason.

"I think it's been more prevalent in Greenville, Myrtle Beach, Charleston, the markets where the pressure and the competition is higher," Blair said. "But it's coming for everybody. It's an exponential increase in the cost of doing business that nobody can avoid. It knocks off the less solid business models, but eventually there's no math to keep going."

Caskey said he expects there will be discussion on legislation to address the matter, but noted it's a complicated, layered issue.

"It's a real issue I take very seriously," the Republican lawmaker said. "But, like a lot of things, finding a solution that will actually make a positive diff erence is a lot harder than just saying, 'Let's fix it.'"