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House approves compromise to clarify dram-shop liability limits despite insurer concerns
Summary
First substitute HB 312 clarified conflicting language in Utah’s dram-shop code, specifying $1,000,000 per person and $2,000,000 per occurrence with a phased implementation. Supporters said it fulfills the state's promise to the public; opponents warned insurers might withdraw or raise premiums. The bill passed 65–6.
On Feb. 20 the Utah House passed first substitute House Bill 312, a measure to resolve conflicting statutory language on dram-shop liability and the insurance obligations of establishments that serve alcoholic beverages.
Representative Snow, sponsor of the substitute, said the existing statute capped an owner’s liability at $1,000,000 per person and $2,000,000 in aggregate but that the insurance requirement had been read as $1,000,000 per occurrence in practice, shortchanging potential claimants. "We're going to cap their liability... The most you can recover, you as a person, is $1,000,000... The most we can recover is $1,000,000," Snow said, arguing the insurance obligation should match the liability cap. To accommodate market concerns, the sponsor reduced an earlier $4,000,000 aggregate figure to $2,000,000 and included a phase-in so renewals and market adjustments could occur.
Opponents and floor questioners, including Representative Oda and others who consult with insurance carriers, warned that many carriers lack reinsurance capacity to offer $2,000,000 per occurrence limits and that costs could rise sharply or insurers could withdraw coverage in Utah. Representative Oda recounted carrier feedback that some firms "will not offer the higher limit" and named companies that were reluctant or unwilling to provide the proposed coverage.
Supporters, including Representative McHale and Representative King, argued that clarifying the statute protects injured members of the public and that market forces would adjust. Representative Andrick provided a statistical explanation of insurer probability and exposure and said the change represents a policy choice balancing public protection against insurer reaction.
Final passage was recorded by the clerk: first substitute HB 312 received 65 yes votes and 6 no votes and will be transmitted to the Senate for its consideration.
The floor debate included multiple requests for additional industry data and several members urged a study or longer phase-in if the House wanted to avoid potential coverage disruptions. The House adopted the sponsor's compromise language and advanced the bill to the Senate.
