Analysis: South Carolina’s unfair civil liability system

The civil liability system in South Carolina is placing an unfair burden on small and medium-sized businesses. This issue has been a focal point of legislative discussions for several years, though reform legislation died in the Senate in 2024. 

Both members of the General Assembly and the governor have recognized the need for a comprehensive solution to this issue. Several legislative proposals have been introduced this year, with S.244 from the Senate emerging as a central piece of the conversation. The bill has sparked significant attention and debate statewide, garnering both support and opposition. 

S.244 is a lengthy piece of legislation that addresses a number of civil liability issues, including liquor liability, construction defects, medical malpractice, and various insurance regulatory reforms. Given the bill's scope and far-reaching implications, separating the bill by subject matter would ensure each receives the deliberation it deserves. 

However, most of the proposed liquor liability changes should be preserved and advanced quickly by the General Assembly. Bars and restaurants across the state have been shutting down at an alarming rate, citing skyrocketing liquor liability insurance costs, a direct consequence of the fundamental unfairness in the current law. 

At the core of the liquor liability crisis is South Carolina’s failure to fairly allocate damages based on proportional fault in an incident. A liability framework that directly ties fault percentages among all those with responsibility to damage allocations – known as a pure several-liability system – is essential to restoring fairness in the system. 

Without this reform, bars and restaurants with relatively little responsibility will continue to face excessive and disproportionate liability, further destabilizing the industry. 

Victims should be fairly compensated for civil wrongs done to them. And those who caused the damages should be held financially accountable, but their responsibility must be based on their actual share of the fault. 

The problems with current law 

South Carolina in recent years has operated under a modified joint-and-several liability system, which allows a defendant with at least 50% of the overall fault in an incident to be held liable for the full amount of awarded damages. If a defendant’s conduct involved the sale of alcohol, the percentage of fault to be held liable can drop to just 1%. 

This creates a situation where businesses can be required to pay a disproportionate share of the total damages because nonparties – typically persons, businesses, or other entities not named as defendants – or other defendants who quickly settle their claims are not allowed to be considered in the apportionment of fault if a case goes to a jury. 

The current system often leads to businesses – even those with minimal responsibility – being burdened with the entire financial responsibility for damages. This has led to rising insurance premiums, particularly on liquor liability insurance for small bars and restaurants, many of which are closing because of the unsustainable increase in costs. 

The main problems with the existing law are twofold: It doesn’t allocate damages based on the proportion of fault, and it excludes nonparties from the fault determination. 

The current system, which permits fault allocation only among the plaintiff and named defendants, results in businesses being held responsible for the actions of others not named in the case. The state law was last amended in 2005. 

The state of liquor liability 

Currently, the liquor liability insurance market is on an unsustainable trajectory. According to a study from the S.C. Department of Insurance, insurers providing liquor liability coverage have incurred approximately $1.77 in losses for every $1.00 in premium earned over the past six years. Because of these losses, many mainline carriers have withdrawn from the marketplace leaving primarily high-risk carriers. 

An analysis of loss ratios suggests that insurers are not charging enough to cover claims, creating an imbalance in the market. This is not an argument for higher insurance costs, but rather a recognition that the current system is financially untenable.  

Something has to change, and all actors play a critical role in the process. But South Carolina’s bar and restaurant owners have been caught in the middle, facing soaring liquor-liability insurance premiums. This dynamic has created a volatile legal and insurance environment where businesses and their insurers bear significant financial risk, often for incidents in which they had limited involvement. 

Moreover, there is little incentive for insurers to lower premiums if, as the Department of Insurance’s study indicates, they are already operating at a loss. Without meaningful reform, businesses will continue to have limited viable coverage options with relatively few insurers left in the state, while victims will be without reliable sources for just compensation. This would effectively create a scenario in which all key stakeholders face negative consequences. 

SC voters’ views 

In a statewide voter poll conducted from Jan. 22-31, SCPC asked more than 1,200 South Carolinians how they felt about the state’s legal climate. 

The polling showed that:  

•  63% supported reforming the “joint-and-several liability” system to require that financial responsibility is distributed based on each party’s proportional share of fault.  

• 57% viewed the current system as unfair, while only 33% believed it to be fair. 

Reforming joint-and-several liability is popular among Republicans, Democrats, and independents. The voters don't believe the current system is fair. 

Senate proposal S.244 

This week, a Senate Judiciary subcommittee approved S.244, which Senate leadership has indicated is its primary vehicle for liability reform. The bill will be in the full Senate Judiciary Committee next Tuesday.  

Under the bill’s most significant change, the state would transition from its current modified joint-and-several-liability system to a pure several-liability system. Under pure several liability, defendants are only responsible for their proportionate share of damages. In contrast, under the existing system, defendants with greater financial resources could be held liable for full verdict awards, regardless of their percentage of the overall fault. 

The bill would require that juries allocate fault among all defendants, plaintiffs, and nonparties, with the goal of holding individuals and businesses accountable only for their respective share of responsibility. This approach aligns with legal frameworks in more than a dozen other states that have adopted pure several liability, fostering a fairer legal environment and, in many cases, contributing to economic growth. 

Additionally, the bill eliminates the exemption that allows alcohol-related civil cases to proceed with just a 1% liability threshold against a defendant. 

These changes would create a fairer system, holding bad actors fully accountable, with minor contributors responsible only for their proportionate share of fault. To compete with other states' business environments and legal climates, South Carolina must pursue this sound policy. 

Beyond liability structure changes, the bill includes provisions related to dram shop laws, which hold establishments liable if their customers cause injury or death; alcohol server training requirements; and several insurance regulations. 

The dram shop portion of the bill lays out clearly defined circumstances in which a business can be held liable for damages resulting from alcohol service. Specifically, a business could face civil liability and risk losing its liquor license if it sells alcohol to a visibly intoxicated individual or to someone it knew, or reasonably should have known, would become intoxicated. 

To help reduce DUI-related incidents, the bill mandates standardized training for all alcohol servers and managers. The training curriculum would cover key topics such as the physiological effects of alcohol, identifying signs of intoxication, recognizing problem drinking behaviors, determining when to refuse service, and verifying identification properly. 

Both the dram shop and alcohol server training portions of the bill would help lessen uncertainty, which, when combined with exposure of risk, leads to high premiums. These changes in conjunction with proper allocation of fault should allow for more competition to return to the liquor liability market and ultimately lead to a decrease in premiums. 

The bill also expands liquor liability insurance options by allowing “captive” insurance companies to provide coverage in this area. A captive insurance company is an entity owned and operated by its insureds, offering a potential solution to South Carolina’s liquor liability insurance challenges. 

Enabling businesses with responsible alcohol service practices to form or join a captive insurance entity would create an incentive structure that rewards compliance with best practices. Businesses that demonstrate strong alcohol management could benefit from lower insurance rates, while establishments with poor practices may face exclusion from these entities. Although this wouldn't entirely solve the liquor liability problem, introducing alternative providers would certainly bring more competition into the liquor liability insurance market, subsequently encouraging lower rates. 

The bill also changes the mandatory minimum coverage for liquor liability policies, requiring businesses that sell alcohol for consumption on its premises after 5 p.m. to have at least $1 million in coverage per occurrence, compared to the minimum $1 million in total coverage for the biennial period of its permit or license. 

This is designed to help victims receive appropriate compensation while also protecting businesses from excessive financial exposure with lower policy limits. However, this higher coverage requirement could delay any potential relief from rising insurance premiums. 

Other provisions 

Besides liquor liability reforms, the bill includes tort-reform proposals in a number of other areas. Here are some of the proposed changes: 

• Construction defects: Amends the law to make insurance companies responsible beyond the current eight-year liability window for covering damages resulting from building code violations, but only when the violation caused personal injury or structural issues. 

• Seatbelt evidence: Allows evidence of a plaintiff’s failure to wear a seatbelt to be presented in court, which may be considered in determining liability and damages 

• Unknown defendants: Specifies that in cases with an unknown defendant (such as a hit-and-run accident), the case must be tried in the county where the incident happened, unless otherwise determined by the court. 

• Motorist insurance policies: Exempts insurers from covering punitive damages – meant to punish defendants for misconduct – for their policy holders resulting from accidents involving uninsured or underinsured motorists 

• Occurrence definition: Amends the definition of “occurrence” relating to medical malpractice, defining it as "an unfolding sequence of events which proximately flow from a single act of negligence including continuous or repeated exposure to substantially the same harmful conditions.” 

• Med-mal damages: Specifies that statutory limits on noneconomic damages – also referred to as “pain and suffering” or “emotional distress” – in medical malpractice claims do not apply if a healthcare provider acted with intent to harm, was convicted or pleaded guilty to a felony, or was under the influence of drugs or alcohol. 

Given the complexity and scope of issues addressed in this legislation, each should be considered individually by separating the sections into distinct bills. These matters warrant dedicated attention from experts representing both plaintiffs and defendants to promote a fair and balanced approach. However, implementing a pure several-liability standard remains essential to requiring that at-fault parties are held accountable for their actions, but only for their actual share of the culpability. 

Liquor liability stakeholders 

The liquor liability issue involves four key stakeholders: individuals who have experienced personal injury or property damage, legal professionals representing those who have suffered harm, bars and restaurants, and insurance providers offering coverage to those businesses. 

Under the current system, the process often allows legal representatives and plaintiffs to focus their claims on parties with the highest insurance limits when multiple defendants are involved. This can lead to situations where businesses with higher coverage find themselves at the center of legal action, with their insurers being required to provide coverage based on their ability to pay. 

While this system is intended to ensure that victims receive compensation, there is now an opportunity for lawmakers to align responsibility with the proportionality of fault so that businesses are not unfairly targeted. 

A model that links damages to the proportion of fault would provide a more equitable distribution of liability, ensuring that compensation is fair for all parties involved, with those responsible being held accountable for their contribution to the incident. 

The verdict 

The volatility of the liquor liability market has been a key driver behind lawmakers’ push for tort reform in 2025. Yet the problem of businesses shouldering a disproportionate share of liability extends beyond the hospitality industry, with similarly harmful effects across other sectors. This imbalance stems from fundamental unfairness embedded in current state law. 

However, given the potential devastating impact of the liquor liability crisis on South Carolina’s hospitality industry, the relevant sections of this bill must be prioritized and advanced without delay. 

Those responsible for damages should be held accountable by victims and their legal representatives, but only for the harm they actually caused. Moving forward with the provisions on liquor liability and pure several liability would be a crucial step toward improving South Carolina’s legal climate and fostering economic growth. 

South Carolina’s economy is deeply tied to the success of the hospitality industry, particularly local bars and restaurants. If no action is taken, the small businesses that make our state an attractive place to live and visit will continue to disappear, eroding the character of our communities and causing long-term harm to the state’s economy.