Effective January 1, 2026, a new law (known as the “SC Justice Act” or Act 42 / H. 3430) went into effect in South Carolina. While it technically keeps the headline requirement for $1 million in liquor liability insurance, it offers businesses specific ways to lower that coverage requirement significantly—potentially down to $300,000—which is intended to reduce insurance premiums.
Here are the key parts of the new law and how it works for business owners:
1. How to Lower Your Insurance Requirement
Previously, any venue serving alcohol after 5:00 PM was required to carry a $1 million policy, regardless of their size or risk. The new law allows venues to earn “credits” to reduce this mandated amount by implementing safety measures.
You can stack these credits to drop your required coverage to a minimum of $300,000:
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Early Closing (-$250k): Stop serving alcohol by midnight.
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Mandatory Training (-$100k): Have all servers complete a state-approved alcohol safety training course within 60 days of hiring.
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Food vs. Alcohol Ratio (-$100k): Maintain alcohol sales at less than 40% of your total revenue (proving you are primarily a restaurant, not a bar).
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ID Scanners (-$100k): Use forensic digital ID scanners between midnight and 4:00 AM.
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Non-Profits (-$500k): Specialized reduction for 501(c)(3) organizations or single-event permits.
2. Liability Reform (“Joint and Several”)
The law also addresses why insurance rates were so high in the first place: the state’s liability laws.
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Old Rule: If a bar was found even 1% at fault for a drunk driving incident, they could be forced to pay 100% of the damages if the actual driver couldn’t pay. This made insurers terrified of writing policies in SC.
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New Rule:
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If a business is found to be less than 50% at fault, they are only responsible for their specific percentage of the damages.
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If a business is 50% or more at fault, they can still be held fully liable, though there are new caps specifically for alcohol licensees in certain DUI cases (often capping liability at 50% of total damages).
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3. “Knowingly” Standard
The law tweaked the language to say that for liability to attach, a venue must have “knowingly” sold alcohol to an intoxicated person. This aligns the rules for liquor with those already in place for beer and wine, removing the stricter “strict liability” standard that previously existed.
Summary for Business Owners
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Immediate Action: You do not automatically get cheaper insurance. You must work with your insurance broker to prove you meet the “mitigation” criteria (training, scanners, hours, etc.) to qualify for the lower coverage limits.
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Long-Term Goal: Legislators hope this law will encourage more insurance companies to return to the South Carolina market, increasing competition and driving down premium costs over time.
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