Liquor Liability: How Agents Can Guide Clients Through a Volatile Market 

• By: Olivia Overman
• August 3, 2026

In general, the property & casualty market is trending toward a soft market in 2026. But while property lines and some personal lines continue to soften, casualty lines remain firm or are hardening, according to The Daily Actuary, as the market is being impacted by rising claims driven by factors such as social inflation and nuclear verdicts.

The liquor liability market—providing coverage for bars, restaurants, nightclubs and event venues—is one market grappling with rising claims and nuclear verdicts and, as a result, increasing rates and reduced capacity.

“Businesses with liquor liability exposure have many different challenges, including but not limited to dram shop, assault and battery, abuse and molestation, human trafficking, slip and fall, animal-related injuries, participant injury and more,” says Joey Shapiro, executive vice president and casualty broker, Amwins.

This creates a complex environment for agents working to provide their clients with the best and most equitable coverage, particularly as every state has different laws governing liquor liability. In response, lawmakers in some states have taken notice and stepped in with reforms aimed at easing liquor liability pressures on businesses.

“Over the last 12 months, we’ve seen new reforms passed and prior reforms take shape in two of the most challenging liquor liability venues in the country, South Carolina and Alabama,” Shapiro says.

South Carolina’s challenging market has been well-documented since a 2017 state law change upped liquor liability coverage requirements to at least $1 million, following a high-profile auto accident that killed two people and severely injured a police officer.

The resulting change in South Carolina, which became effective on Jan. 1, 2026, dictates that “defendants found less than 50% at fault will pay only their share of the damages, limiting plaintiffs from going after the deepest pockets regardless of their proportion of fault,” Shapiro explains.

Further, “in Alabama, we’ve seen the legislation from 2023 continue to improve conditions in the state, which eliminated the former strict liability standards and imposed a knowing liability standard, requiring the establishment to have knowingly served an intoxicated patron to be at fault,” Shapiro says.

Yet for the 43 states that have some form of dram shop statute in place—allowing businesses to be held liable if they sell or serve alcohol to intoxicated individuals who cause an injury or damage property—the market remains difficult.

In the seven states without dram shop laws—Delaware, Kansas, Louisiana, Maryland, Nevada, South Dakota and Virginia—liquor liability insurance premiums are rising but nowhere near the heights of other states.

For establishments where alcohol accounts for a significant portion of revenue, rising liquor liability claims are driving premium increases and leading some insurers to withdraw from the market.

In some states, annual premiums have increased 300% to 600%, with small neighborhood bars seeing costs rise from $5,000 to $50,000 or more, regardless of their claim history, according to industry sources.

“The industry has favorable results in the state of California, but other states like South Carolina, Arizona, Oregon and Texas are not favorable,” says Lowell Bassett, executive underwriter at Admiral Insurance Group. “This is leading many businesses to want to pull back in the unfavorable states.”

“As conditions worsen in unfavorable jurisdictions, we anticipate other states will consider reforms as pricing continues to soar in those distressed venues,” Shapiro notes.

In response, agents need to ensure they are up to date on legislative changes that could affect their clients, particularly when such shifts alter available coverage options.

“As operators continue to focus on the experience of the customer and introduce new concepts, such as restaurants and bars with golf simulators, indoor soccer fields and other entertainment offerings, the potential for catastrophic injury climbs with it,” Shapiro says. “It’s critical that risk management is a main point of consideration rather than an afterthought.”

Olivia Overman is IA content editor.