Insurance Crisis is Stopping New Restaurants from Opening, Restaurateurs Say
Soaring insurance costs, particularly for liquor liability, are significantly impacting the restaurant industry in South Carolina, according to multiple sources. The crisis has not only prevented new businesses from launching but has also forced some established establishments to close their doors.
Jonathan Kish, owner of 82 Queen and Florence’s Lowcountry Kitchen in Charleston, is familiar with these challenges. He had initially planned to develop a wedding venue with an open bar in Hollywood, but instead, he sold the 6-acre property. A key factor in this decision was the prohibitive cost of the insurance required under state law for businesses that serve alcohol, he explained to the SC Daily Gazette.
Since 2017, a state law mandates that businesses serving alcohol after 5 p.m. must carry insurance policies with a minimum of $1 million in coverage. This has dramatically increased the financial burden on restaurants, especially those operating with thin profit margins.
“It makes you think twice,” said Kish, reflecting on the deterrent effect of the law.
Steve Cook, owner of Saluda’s in Columbia’s Five Points, and other Midlands restaurants, noted that the high insurance costs have created a substantial financial target on businesses. He described the situation as creating “a million-dollar stack of cash on every bar and restaurant in the state.”
Restaurants are facing two primary issues: excessively high insurance premiums and a shrinking number of providers willing to offer coverage. Insurance companies lost an average of $1.77 for every $1 in premiums earned from liquor liability policies between 2017 and 2022, according to a January 2024 report from the Department of Insurance. The report characterized the liquor liability landscape as “very troubled and challenged.”
Keith Benjamin, whose Uptown Hospitality Group operates several restaurants in Charleston, experienced an 800% increase in his premiums within five years. He has expressed concern that without industry reforms, he may have to consider expanding his business outside of South Carolina.
The rising costs have also resulted in the closure of long-standing establishments. Velo Fellow, a brewery and music venue in Greenville, closed after 14 years of operations and The Blind Horse Saloon, a Greenville staple for nearly three decades, also shut down.
Legislative efforts are underway to mitigate the crisis. The House passed a bill in early March with the backing of House Judiciary Chairman Weston Newton, R-Bluffton, featuring a mitigation program that lowers the minimum coverage amount if businesses take steps to reduce their likelihood of getting sued. A broader proposal, sponsored by Senate Majority Leader Shane Massey, R-Edgefield, seeks a more comprehensive reform of liability insurance across multiple sectors.
Lex Hudson, a spokeswoman for the state Bar and Tavern Association, supports the Senate proposal, describing it as “surgery to fix a broken arm,” in contrast to the House bill, which she likened to a “Band-Aid.”
The hospitality sector is a major economic driver in South Carolina, and industry leaders are urging lawmakers to reach a solution.
