Liquor liability insurance costs are skyrocketing, leaving bars, restaurants, and venues asking: Can we even afford to stay open? From South Carolina’s tough market to Alabama’s recent reforms, establishments nationwide struggle to secure coverage. Explore why costs keep climbing and how agents can help clients navigate this marketplace.
Owning a bar may sound like a dream job, but the reality has become far more challenging for many establishments, whether it be neighborhood pubs, music venues, or restaurants. Rising liquor liability premiums are forcing some businesses to close, as insurance costs continue to climb. This upward trend is fueled by both economic inflation and social inflation, with jury awards increasing in size and frequency.2 Now that courtrooms have fully reopened after the pandemic, the surge in drunk driving lawsuits is adding even more pressure, pushing liquor liability coverage costs to unprecedented levels.
Rising insurance rates are eroding profit margins, making it challenging for establishments to cover employee costs and maintain their equipment. Rising liquor liability rates in South Carolina leave many bars with a massive bill. One South Carolina restaurant group reported that their insurance rates have increased by 86%. Another bar’s annual premium jumped from $8,000 to $54,000 within two years. An arcade co-owner in Columbia shared that their insurance rates started at $6,000 per year in 2020 and are now $65,000 annually, as of 2025.1 While South Carolina’s marketplace didn’t truly begin to feel the strain until 2022, the issue can be traced back to 2017, when legislators passed a law requiring establishments with liquor licenses to purchase at least $1 million’ worth of liquor liability coverage. The 2017 legislation was passed in response to an incident where a drunk driver without insurance left a bar, which also didn’t have insurance, and collided with a police officer, causing devastating injuries.1
South Carolina lawmakers intended the law to cover similar instances, but for many, it pushed up coverage prices and drove bars out of business. It also made claims far more expensive for insurance carriers. Over the past five years, numerous insurance carriers have withdrawn from the state. As premiums increase yearly, driven by losses, there’s a lack of competition in the space, which usually helps keep rates down. Markets continue to exit, and finding a potential insurer can be extremely challenging as most shy away from liquor liability business due to high losses.
However, South Carolina lawmakers passed H.3430 (Act 42) earlier this year, with changes set to take effect on January 1, 2026, to ease liquor liability pressures on businesses. The new law adjusts liability rules, restores the “empty chair” defense to apportion fault to non-parties, caps an establishment’s liability at 50% of damages when paired with a DUI defendant, and incentivizes responsible service practices through reduced insurance requirements.8 These reforms mark meaningful progress, but they have not enticed insurers back into the state. A central sticking point remains the Tyger River Doctrine. This 1933 South Carolina Supreme Court precedent holds insurers liable for the full amount of a judgment if they unreasonably refuse to settle within policy limits. Because lawmakers have been unwilling to amend this doctrine, many carriers remain hesitant to reenter the market, thereby limiting the immediate impact of the reform.
South Carolina doesn’t allow businesses to self-insure for liquor liability if the establishment is permitted to sell alcoholic beverages for on-premises consumption after 5 p.m. In addition, those with alcohol revenue percentages of more than 30% have an increasingly difficult time obtaining coverage as the percentage of alcohol revenue climbs toward 50%-75%. Even clean accounts with no losses are seeing premiums rise to between $25,000 and $50,000, which is too high for many to pay reasonably. Without liquor liability coverage in South Carolina, bars, venues, and restaurants must close.
Business owners in several other states also have difficulty finding coverage as markets dwindle. Vermont bars, nightclubs, and other establishments that serve alcohol were already facing sharp, often unaffordable increases in insurance costs. Still, they often struggle to find a company to provide coverage now.2 Placing liquor liability for establishments in Texas or the District of Columbia is also highly challenging, especially for smaller operations. Several common “go-to” carriers for other lines won’t consider liquor liability, and the one or two remaining have tightened their underwriting guidelines to be even stricter. Larger brokerage risks, with more than $1 million in alcohol sales, result in high rates and premiums, making it challenging to obtain binding orders. Some carriers only consider offering coverage when the premium exceeds $100,000.
In 2024, a new player entered the Kentucky market, introducing broad coverage options for both BOPs and standalone liquor liability policies. Their entry significantly altered pricing dynamics. As a result, many accounts shifted, making it sensible to partner with an MGA to gain market access. Over the past year, it has proven very competitive in premium and coverage, supporting the writing of substantial business through this avenue.
Outside this shift, most other liquor markets in Kentucky have largely maintained their underwriting criteria for higher-risk bars (4 a.m. closings and 75%+ liquor sales). The biggest challenge remains for smaller bars, those making under $200,000 annually and accounting for just under 75% of liquor sales. Many of these operators struggle with affordability and often opt for lower limits or, in some cases, go without coverage altogether.
As of July 1, 2024, Indiana enacted a new requirement: Any establishment holding a liquor license must carry a minimum of $500K in liquor liability coverage. Historically, Indiana did not require coverage, so this change has spurred a wave of new applications. The good news is that Indiana remains an easier state in which to place liquor liability, with multiple carriers offering coverage through both package policies and standalone options at very competitive rates.
Alabama, a state with Dram Laws, passed liquor liability insurance reform legislation. Before the passage of the new legislation in 2023, there were only three carriers providing policies to retail establishments. They required a minimum of $100,000 in coverage, often at a cost of over $35,000 annually. However, the new law creates a broader standard. In Alabama, a server will have to serve an intoxicated person knowingly, and that service must be the proximate cause of the injury or death, if incurred. With the passage of this legislation, the cost of liquor liability insurance for restaurant and bar owners is expected to decrease, allowing businesses to purchase higher amounts of insurance protection at a lower price.6
Currently, 43 states and the District of Columbia have some form of a Dram Shop law in place. Dram Shop laws increase the likelihood of lawsuits being filed against businesses. Such laws hold businesses like bars and restaurants liable for serving or selling alcohol to minors or intoxicated persons who later cause death, injury, or property damage to another.3 States with Dram Shop laws allow establishment landlords, along with individual employees, and the bar itself, to be sued if an intoxicated customer later causes an accident or injures someone.2 Even in states without Dram Shop laws, a business can be named in a lawsuit over the actions of an intoxicated customer. Suppose a ruling is made in the establishment’s favor. In that case, the business must still pay defense costs and other legal fees, making liquor liability insurance a critical protection for any business that sells or serves alcohol.
HOW AGENTS CAN HELP
Agents can help insureds consider business model changes or risk management strategies that may help with the affordability of liquor liability coverage, including:
- Social Media Clean-up. Most carriers are diving deep into social media. Suppose a bar maintains older posts featuring advertisements about social events, drink specials, and trivia nights that are no longer occurring. In that case, it’s wise to remove the information because underwriters may assume those events are ongoing.
- Review Business Hours + Menu Options. Insureds that stay open into the early morning hours should review the level of business between 2 a.m. and 4 a.m. to determine if it’s really worth staying open that late. If not, the liquor license can be amended to help lower premiums. Some bars that cannot serve food alongside alcohol have also hired food trucks to cater to their patrons. While that creates a subcontracted cost, it illustrates that food is available.
- Establish Rigorous Risk Management Policies. Carriers often ask about policies to help prevent an intoxicated patron from driving, such as providing ride shares or a designated driver to drive people home. Bartenders should also maintain current certification through TIPS, a skills-based training program designed to prevent intoxication, underage drinking, and drunk driving, or another credible organization. Point-of-sale systems, security cameras, and ID scanners that monitor alcohol service can also be key risk management tools.
- Gather Current Data. It’s helpful to have updated applications and at least five years of currently valued loss runs for every establishment up for renewal to facilitate remarketing. Any account with a loss should provide detailed information about any claims, especially those that remain open. Agents can also assist brokers by allowing enough time to remarket the account adequately. Ideally, starting marketing at least 45 days out is wise to ensure options can be found. Because available markets are dwindling in some places, remaining underwriters are swamped with submissions.
- Produce Low-touch Submissions That Tell a Story. Because underwriters are busier than ever, every submission should be complete upfront, requiring minimal back-and-forth between underwriting and the insured. Telling the insured’s story can also help underwriting feel more comfortable with a risk.
BOTTOM LINE
Many places around the country are quickly approaching a critical point regarding liquor liability insurance for restaurants, clubs, bars, and music venues. For most, it’s no longer just a question of affordability. It’s also whether a business can even obtain coverage. The outlook for liquor liability is tough as Dram Laws remain prevalent and social inflation drives up jury awards. Tort reform is needed in several states, as carriers are often more willing to write business in states that have enacted strong tort reform, which protects both the server and the consumer.
Businesses that gamble by self-insuring may find that one claim can put them out of business. CRC Specialty is home to brokers with the product knowledge and market relationships needed to help clients obtain the best possible coverage options in a challenging liquor liability marketplace. Contact your local producer today to learn more.
CONTRIBUTORS
Renee Middleton is CRC Group’s Sumter, South Carolina, Office President.
Sallie Howerton is an Inside Broker with CRC Group’s Indianapolis, Indiana office.
END NOTES
- More Liquor Liability Legislation Expected in 2025, Uptown, January 2025. https://www.masc.sc/uptown/01-2025/more-liquor-liability-legislation-expected-2025
- Rising Insurance Rates Threaten Vermont Bars, Clubs and Restaurants, Seven Days, March 22, 2023. https://www.sevendaysvt.com/vermont/rising-insurance-rates-threaten-vermont-bars-clubs-and-restaurants/Content?oid=37849147
- Dram Shop Laws: History and Explanation in Alcohol Sales, Investopedia, October 2021. https://www.sevendaysvt.com/vermont/rising-insurance-rates-threaten-vermont-bars-clubs-and-restaurants/Content?oid=37849147
- Dram Shop Laws, FindLaw, October 25, 2023. https://www.findlaw.com/dui/laws-resources/dram-shop-laws.html#:~:text=As%20of%202023%2C%2042%20states,%2C%20South%20Dakota%2C%20and%20Virginia
- Drunk Driving Statistics. ValuePenguin, February 11, 2025. https://www.valuepenguin.com/drunk-driving-statistics#:~:text=Drunk%20driving%20is%20responsible%20for,people%20die%20from%20drunk%20driving?&text=Which%20holidays%20have%20the%20most%20drunk%2Ddriving%20accidents
- Alabama Senate Passes Liquor Liability Insurance Reform, Alabama Political Reporter, March 24, 2023. https://www.alreporter.com/2023/03/24/alabama-senate-passes-liquor-liability-insurance-reform/
- The Cost of Drunk Driving, SafeHome, November 2024. https://www.safehome.org/resources/dui-statistics/#:~:text=The%20Cost%20of%20Drunk%20Driving,-We’ll%20look&text=First%2C%20let’s%20tackle%20the%20societal,gets%20arrested%20for%20a%20DUI.&text=The%20cost%20of%20a%20DUI,24%20hours%20to%20several%20years
- South Carolina’s New Tort Reform and Liquor Liability Law, Cozen O’Connor, June 16, 2025. https://www.cozen.com/news-resources/publications/2025/south-carolina-s-new-tort-reform-and-liquor-liability-law