Small businesses in South Carolina are seeing the effects of a bill that requires any business with a liquor or beer license to maintain a liability insurance policy that covers at least $1 million. 

The requirement came from a bill passed in 2017 known as Bill 116. Not only have premiums increased but the number of venue insurance companies in the Palmetto State has decreased significantly. 

When the bill was passed, there were nearly 25 insurance carriers in the state who offered liquor liability insurance. Now, there are three.

And with that type of insurance policy comes extremely high out-of-pocket fees that are leaving some businesses barely scraping by. 

“A few years ago, liquor liability for an annual policy was about $5,000 but this year, the cheapest we're seeing is $55,000,” said Asheton Reid, owner of Rockerbelles in the Upstate town of Piedmont “Imagine your car insurance going up like that. The repercussions of Bill 116 are very apparent. Insurance prices are skyrocketing because we only have a few carriers left in the state that will even write liquor liability insurance policies.”

Reid is the director of community outreach for S.C. Venue Crisis, an organization created to bring attention to the developing struggles of businesses.

The problems began when legislation was put into place to hold businesses liable for overserving or knowingly serving an intoxicated person. The legislation distinctly placed businesses liable in the case of accidents while under the influence. 

Two people died in a car crash when leaving a club in Dillon in 2014. The incident also critically injured a police officer who had been responding to a call from the club. 

Neither the driver nor the club had proper liability insurance, causing medical bills, funeral expenses and damages to become the responsibility of the county. Dillon paid over a million in expenses.

State Sen. Gerald Malloy (D-Darlington) was one of the bill's sponsors back in 2017. He failed to comment on the effects the bill has on businesses. 

But in the midst of protecting towns and those injured by uninsured drivers, the legislation has caused financial damage to several locally owned businesses. 

 According to Diane Hardy, executive director for the S.C. Mom and Pop Alliance, approximately four businesses have closed their doors due to the price of liability policies. 

There isn’t a way to tell how many businesses have closed due to the insurance problem, but Reid and Hardy expect there to be more that haven’t voiced their struggles.

“We don’t usually know if a business is actually having an issue with this until it's too late,” Reid told the Chronicle. “If they don't speak up, no one ever knows.”

Hardy founded the Mom and Pop Alliance shortly after the world was sent into quarantine by COVID-19. Her goal was to provide lobbying assistance to small business owners like herself who struggled to stay open during the pandemic. 

“I own a small business myself and had 44 employees during that time and I was really concerned with how small businesses were being treated during COVID,” Hardy said. “I wanted to see who speaks for small businesses in South Carolina and in Columbia. And I found out that we needed more representation and more groups speaking for us.”

But since the effects of the liability insurance bill have begun to show, Hardy has focused both her and the Alliance's attention on figuring out a solution. 

One of Hardy’s main concerns with the bill was that some businesses would suffer due to the legal jargon that is often hard to interpret. The Alliance helps to break down that barrier by offering platforms for discussion on social media. 

The biggest criticism of Bill 116 is that it holds all venues that served an individual responsible for that individual's actions – even if the venue is able to prove they didn’t over-serve that person. 

The wording of the bill also allows trial lawyers to target whichever venue they desire, often targeting the ones with the deepest pockets.

“Maybe a business is only 20% responsible for what actually happened, but because they have the best insurance or the deepest pockets they will bear the full weight of that fault,” Hardy said. “Even if they weren’t the cause.”

The groups do not want to get rid of the requirement for liability insurance, but to lower it back to a sustainable price.

A solution they’re currently exploring is introducing an act that would rewrite the way liability policies are written. 

South Carolina is a joint and several liability state, meaning that all businesses can be held accountable regardless of how big a role they played in an incident. 

“What we'd like to see is proportionate liability where you only pay out what you are proportionally at fault for doing,” Hardy said. 

There are two pieces of legislation that could change liability insurance in the state. Bill 4529 and Bill S.533. 

Both S.C. Venue Crisis and the alliance are working with state representatives such as Jay Kilmartin (R-Lexington), to amend legislation for lower liability minimums while still holding the proper venues accountable.

Kilmartin is not just a representative but a small business owner himself. He owns two Melting Pot locations, one in Columbia and the other in Greenville. At a recent town hall event put on by S.C. Venue Crisis, he urged attendees to participate and research legislation they’re passionate about. 

“I beg people to pay attention,” Kilmartin said. “Come down there and watch us on the House floor, watch the political theater go on. If you're passionate about a certain bill, look it up. Find your passion down there, follow it and then speak to your legislators.”

It’s not just businesses being impacted, but the economy as a whole and the matter has left owners such as Reid expressing the disappointment they feel from not being properly protected by their state.

“It is very disheartening because I was born and raised in this state,” Reid said. “I love this state. And it has so much potential if only people would think about others instead of just themselves.”