Restaurant owners strategize around rising insurance rates, seek help from SC lawmakers

Posted 1/11/24

The second session of the 125th South General Assembly began this week, and activists are calling attention to proposed legislation that could modernize liability laws in the Palmetto State. 

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Restaurant owners strategize around rising insurance rates, seek help from SC lawmakers


The second session of the 125th South General Assembly began this week, and activists are calling attention to proposed legislation that could modernize liability laws in the Palmetto State. 

On Jan. 8, business owners, insurance representatives, employees, and one legislator met at an event hosted by S.C. Venue Crisis at the Art Bar in downtown Columbia to discuss the rise in insurance premiums that are threatening the livelihood of local businesses.

The event was initially planned to precede a rally that was set to be held on the Statehouse grounds Jan. 9 that was postponed because of inclement weather.

The meeting called attention to Senate Bill S.533, also known as the S.C. Justice Act. The proposed bill would amend legislation to create liability laws that would ensure businesses are only accountable for damages equivalent to their share of fault in civil lawsuits.

The drastic rise in insurance premiums comes from several reasons but the main cause is the limited number of insurance companies willing to write policies for alcohol liability in the state.

“Prior to the mandated minimum being in place, we had over 35 different carriers writing these kinds of policies for our members in 2017, and now we're down less than five,” said Hank Davis, vice president of governmental affairs and community development for the state Restaurant and Lodging Association.

Businesses with liquor or beer licenses in the Palmetto State are required 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. 

The proposed legislation will not affect the required liability minimum but rather it will reduce the likelihood of insurance companies facing lawsuits for amounts exceeding the responsibility of their policyholders which could in turn allow for more insurance companies to insure those who serve alcohol.

Josh Bumgarner, co-owner of Columbia’s Transmission Arcade, told the Chronicle that his yearly insurance premium increased from $7,000 in 2020 to nearly $65,000 when he renewed his policy in 2023. 

Business owners and servers “do it because of their love for food, their love for cocktails, their love for people and their love for that sense of community,” Bumgarner said. “No matter what anyone says, a bar or a restaurant is a place where the community comes together. Insurance right now feels like the rich getting richer.” 

Transmission considers it a privilege that they’re capable of paying its cooks $20 an hour and it’s even more of a privilege to use compostable paperware to make less of an impact on the environment. 

But some expenses could change as the arcade faces a $5,000 insurance bill every month. 

“Our kitchen staff, we're lucky enough to pay them $20 an hour,” Bumgarner said. “If I think about the sales I have to cut off to meet a minimum, that cuts into their bonuses, that cuts into their job, and I don’t want to do that to them.”

“We raised our prices a quarter on food because we switched to all compostable stuff,” he added. “We wanted to do our part, but I'm switching back to styrofoam and I’ll probably have to raise prices again because I’ve got eight months to figure this out.”

Bumgarner has tried to balance the increases with raising prices, but he considers most of it to be unfair. 

“It's unfair if I have to charge somebody $9 for a 12-ounce Bud Light because my insurance premiums have gone up 300%,” Bumgarner said.

Bumgarner and the other owners of Transmission intend to reevaluate the viability of their business in June before the renewal of their lease. 

Other businesses across the state have struggled to launch their business amidst the battle over insurance. 

Greta Moore, owner of Two Rivers Public House in Oconee County, has been waiting since November to hold her grand opening. 

She only opens the doors to her business three nights a week and she pushes food sales more than anything else. 

Moore’s insurance company will complete an audit in October that will determine how much she owes her insurer if her sales don’t meet proper food-to-alcohol sale ratios. 

She must have at least 70% of her sales come from food and only 30% of her sales from beer and wine. 

“I don't know what I'm going to owe,” Moore said. “It could be anything, some people have gotten hit at $100,000 to $150,000. I have no clue what it’ll be.”

Moore and her husband began the process of opening her business in the early months of 2023 when she decided to move from Florida back to her hometown in Oconee. Her business was meant to be something that would last for her children. 

“I may very well have to cut my losses, my kids would lose everything and then I go back to Florida,” she told the Chronicle. 

About 10% of state’s economy comes from the tourism and hospitality industry. In 2022, the state set a record of $29 billion contributed to the state's economy according to the S.C. Department of Parks, Recreation and Tourism.

“Something has to be done, there's no question about it. I think that the noise that the Coalition for Lawsuit Reform, the Venues Crisis, and our association … plus it’s an election year,” Davis said. “It cannot be ignored at this point. We cannot wait another year for reform in this state.” 

The S.C. Venue Crisis has not announced a new date for the postponed rally.

S.533 has 23 sponsors in the Senate and its companion bill, H.3933, in the House has 49 sponsors.

“It affects everybody along the line,” Bumearner said. “Anybody that has anything to do with the industry where alcohol is involved, no matter what kind it is, it's all going to affect them.”

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