Every Accident Hurts Employees and the Company
Accidents are more expensive than most people realize because of the hidden costs. The more accidents that occur in a workplace, the higher the costs - both in direct costs paid by insurance premiums and greater uninsurable indirect costs.
Typically, companies will suffer from the more numerous indirect costs that are not usually covered by any insurance. In fact, studies show that the ratio of indirect costs to direct costs varies widely, but may be as high as 20:1. The magnitude of indirect costs is inversely related to the seriousness of the injury. The less serious the injury the higher the ratio of indirect costs to direct costs.
Below are examples of direct and indirect costs of accidents in the workplace:
Direct Costs (Insurable)
- workers compensation costs
- legal insurance costs
- vehicle insurance costs
Indirect Costs (Uninsurable)
- any wages paid to injured workers for absences not covered by workers' compensation
- the wage costs related to time lost through work stoppage associated with the worker injury
- the overtime costs necessitated by the injury
- administrative time spent by supervisors, safety personnel, and clerical workers after an injury
- training costs for a replacement worker
- lost productivity related to work rescheduling, new employee learning curves, and accommodation of injured employees
- clean-up, repair, and replacement costs of damaged material, machinery, and property
- the costs of OSHA fines and any associated legal action
- third-party liability and legal costs
- worker pain and suffering
- loss of good will from bad publicity that may result in loss of business
As you can see, there are many possible indirect costs associated with each accident. Every accident prevented represents potentially huge savings to the company.
Knowledge Check Choose the best answer for the question.
1-2. Bad publicity and loss of business are examples of _____ of a vehicle accident.
You forgot to answer the question!