COLUMBIA — A major convenience store chain could stop adding locations in South Carolina or pull out of the state completely because of the state's high liability insurance costs, the chain's owner said.
Liability insurance rates have climbed 400 percent in the past couple of years for Georgia-based Parker's Kitchen, which operates 28 convenience stores in South Carolina including nine in the Charleston area, company founder and CEO Greg Parker said. That's far above what he's paying in Georgia.
Parker blames how S.C. courts have allowed a single company to be targeted as defendants in alcohol liability cases. The potential cost is so huge that it has Parker reconsidering his plans in South Carolina.
"With this law being the way it is, we might be better off going somewhere else," Parker said.
The law that has drawn Parker's ire is how courts in South Carolina can decide which parties must pay lawsuit damages.
Parker is well aware how much such suits potentially can cost. His company is being sued over a Beaufort County boating accident that left a young woman dead.
Under current state law, a company in South Carolina can be ordered to pay the entire amount of damages from a lawsuit related to alcohol even if a jury agrees that the company was one of several responsible parties.
Other states including Georgia spread the responsibility for an accident more broadly.
Such a lawsuit can raise a company's insurance rates sizably even if the case has not been decided yet, said Bruce Bishop, president of the PC&L Agency, a business insurance company in Charleston.
In such a situation, an insurance company will raise rates to bolster its accumulated funds in case of a large payout, he said.
The insurance industry has been hit by major payouts by disasters including the California wildfires in recent years, Bishop said. That means insurers likely are looking to cut down on their exposure to risks.
The result, he said, is one of the toughest markets to buy business liability insurance in decades, Bishop said.
The leader of the state's plaintiffs attorneys group said that the S.C. law was crafted in 2005 as a compromise between the rights of plaintiffs and defendants. The Legislature wanted plaintiffs to have the opportunity to receive the full award the court ruled for them, even in a case where some defendants have settled and others go to trial, he said.
A pending bill in the Legislature that would drastically change how state liability law works, said Richards McCrae, a Rock Hill attorney and president of the legal group S.C. Association of Justice.
Under the current law, a defendant might be held liable for an entire settlement if they are assigned more than 50 percent of the responsibility for damages in court, he said.
The bill, drafted by Senate Majority Leader Shane Massey, an Edgefield Republican who is a lawyer, allows a portion of responsibility for the damages to be assigned during the lawsuit to groups that are not defendants, such as those that already reached settlements in the case. That would make it less likely that one company would go to trial and lose, then be assigned the full liability.
The bill did not advance beyond a Senate committee this year, the first year of a two-year session.
Parker's business is one of several defendants in a lawsuit over a boating accident that left a 19-year-old woman dead. The boat struck a bridge near the Parris Island Marine training facility in the early hours of Feb. 24, 2019, killing Mallory Beach.
The lawsuit, filed in Hampton County, alleges that Parker's Kitchen bears liability for the death because a minor illegally bought alcohol at a Ridgeland store with an identification that was not his, serving it to others including the boat's pilot.
A settlement by the family of Paul Murdaugh, who has been charged as the driver could leave Parker's company as the lone defendant in the case.
In response to the lawsuit, Parker's company issued a statement saying that it takes its responsibility for alcohol sales seriously.
If the law in the state is not changed, Parker believes that many other companies besides his own in the state will suffer with high insurance costs. Only two companies now cover alcohol-related liability for businesses, he said.
He wonders how mom-and-pop convenience stores that don't have the resources of his chain will be able to afford insurance. The problem could extend beyond convenience stores to bars and restaurants, he said.
Liability coverage for alcohol sales has been a problem area in South Carolina that the state Department of Insurance has been monitoring for a while, said Raymond Farmer, the agency's commissioner.
Farmer said he has heard from a couple of businesses that costs have become a problem. His advice for now is the same that he tells all insurance customers: shop around whenever it is time to renew to get the best rate.