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Costs
of Accidents
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Did
you know that the average cost of an eye injury is $1,463, when
you consider all the hidden costs?
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Accidents are
more expensive than most people realize because of the hidden costs. Some
costs are obvious — for example, Workers' Compensation claims which cover
medical costs and indemnity payments for an injured or ill worker. These
are the direct costs of accidents.
 But
what about the costs to train and compensate a replacement worker, repair
damaged property, investigate the accident and implement corrective
action, and to maintain insurance coverage?
Even less apparent are the costs related to schedule delays, added administrative
time, lower morale, increased absenteeism, and poorer customer relations.
These are the indirect costs — costs that aren't so obvious until
we take a closer look.
Here's a quick way to estimate the annual cost of accidents in your workplace.
Studies show
that the ratio of indirect costs to direct costs varies widely, from a high
of 20:1 to a low of 1:1. OSHA's approach is shown here and says that the
lower the direct costs of an accident, the higher the ratio of indirect
to direct costs.
OSHA's Ratio of Indirect to Direct Costs
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Source: Business
Roundtable, Improving Construction Safety Performance: A Construction
Industry Cost Effectiveness Project Report, Report A-3, January, 1982.
The more
accidents that occur in a workplace, the higher the costs — both in
increased insurance premiums and greater indirect costs.
To help assess the impact of occupational injuries and illnesses on your
profitability, try out OSHA's "$afety Pays"
Program. It uses a company's profit margin, the average
cost of an injury or illness, and the indirect cost multiplier to project
the number of sales you would need to cover those costs. Also, use a worksheet to
help determine the costs of injuries and illnesses
and their impact on your business operations.
See these
other "$afety Pays" fact sheets for more information.
Now that you have an idea of the high costs of accidents, how can you begin reducing them?
Go to the next page.
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