As we reported extensively during 2025, the South Carolina legislature spent much of the year debating various tort reform bills, none of which were good for South Carolina personal injury law firm clients and their families. Just before the legislature adjourned, the two houses reached an agreement on one aspect of tort reform—changes to liability and insurance requirements for establishments that serve alcohol.
That new law took effect on January 1.
Tort Reform and Liquor Liability (H.R. 3430)
Existing South Carolina law prohibits establishments that sell alcohol from selling alcohol to anyone who is under the age of 21 or intoxicated. In the past, someone injured by a drunk driver who was illegally served alcohol had a claim against the establishment if it was negligent.
The new law that took effect on January 1, 2026 changes the legal prohibition from “may not sell these beverages to persons in an intoxicated condition” to “may not knowingly sell these beverages to persons in an intoxicated condition.”
This change in language creates a higher bar for victims seeking to recover damages when injured by someone who was served alcohol while already intoxicated.
Limitations on Percentage of Liability
Under prior law, an establishment that served an intoxicated or underage person who later caused an accident could be liable for the full amount of the injured party’s damages. This was especially important because drunk driving accidents often result in catastrophic injuries, and drunk drivers are frequently uninsured or underinsured.
Under the new law, an establishment that overserves alcohol cannot be held more than 50% liable for DUI-related injuries. As a result, people who suffer serious injuries may be unable to recover full compensation for their car accident claims and could be left responsible for tens or hundreds of thousands of dollars in medical bills and related costs.
The law also allows defendants to add non-parties to the verdict sheet, meaning fault may be assigned to individuals who are not parties to the lawsuit and will not be required to pay their share. This further reduces the amount an injury victim may be able to recover.
Shrinking Insurance Coverage for Liquor Establishments
Under the previous law, bars and restaurants that served alcohol were generally required to carry a minimum of $1 million in liability insurance. While $1 million may sound substantial, the requirement was an annual aggregate—not per incident—meaning the coverage could be divided among multiple injured parties.
The new law allows establishments to reduce that requirement in several ways. For example:
If all servers complete a training course—already required by law—within 60 days of employment, the minimum coverage is reduced by $100,000. If the establishment stops selling alcohol at midnight, coverage drops by another $250,000. If less than 40% of the business’s revenue comes from alcohol sales, there is an additional $100,000 reduction.
An establishment that qualifies for all three reductions could lower its required insurance coverage to $550,000—again, that amount applies to all liability incurred over an entire year, not a single incident.
It is difficult to imagine how a victim of a drunk driving accident occurring at 11:30 p.m. would need less medical care or miss less work than someone injured after midnight.
While an establishment may still be liable for damages exceeding its insurance policy limits, a small business may be unable to pay those additional costs. In that scenario, a serious accident could both put the business out of operation and leave the victim without access to necessary care.
The Bottom Line on South Carolina Liquor Liability
The legislature aimed to make things easier and less expensive for businesses that sell alcohol, and they may have succeeded—at least until those businesses face liabilities that exceed their reduced insurance coverage.
Insurance companies and their lobbyists have long argued that tort reform measures would lower insurance premiums. However, those claims remain vague and unsupported by data. In several states where similar reforms were enacted, premiums actually increased.
The trade-off for these uncertain promises of cost savings is the increased risk of serious harm to victims of drunk drivers who were overserved by businesses legally obligated to act responsibly.
The Worst May Be Yet to Come
The changes to South Carolina liquor liability are troubling, but the original bill debated in 2025 contained even more severe provisions, including:
- Reducing what uninsured motorist coverage would pay
- Extending caps on punitive damages in medical malpractice cases, even where providers acted with gross negligence or willful misconduct
- Severely restricting property owners’ ability to recover damages for hidden defects
Although these additional provisions did not pass in 2025, they remain under consideration. As debate resumes, it is important for residents to tell their legislators they do not want insurance company profits protected at the expense of their communities.