10/01/2012

Dear Professional Driver,

We Safety Managers preach a lot about accident prevention. Accident prevention is to protect lives, property, while limiting exposure to the company’s liability against the associated costs of accidents. Do you know what the associated costs are? To understand these costs, you must take into account there are two (2) types of costs: Direct and Indirect.

Direct Costs are those costs which have specific dollar values assigned: Cargo Damage, Medical Costs, Vehicle Damage, Loss of Revenue, Towing and Storage, Emergency Medical Transportation, Environmental Emergency Response and Remediation, Workers’ Compensation, Increased insurance premiums, Administrative Costs for filing accident reports and claims, Legal Representation and Court Fees, etc.

Indirect Costs are those hidden costs that many employers don’t take into account when an accident occurs. These costs include: Poor Publicity, Loss of Sales, Replacement Vehicle Rental, Loss of Customers, Employee Lost Work Time, Cost to hire & train replacement employees, Management’s Time, Medical Costs not covered by Workers’ Compensation, Loss of depreciation of down equipment, Loss of Productivity, Overtime required to cover lost work days and the list goes on.

The Federal Motor Carrier Safety Administration had a study conducted in 2005 to estimate the average cost of a police-reported highway crash involving a truck with a gross weight rating greater than 10,000 pounds. The study showed the estimated cost totaled $ 91,112.00 which included:

• $5,606.00 in medical costs
• $191.00 emergency services
• $7,847.00 property damage
• $6,231.00 in lost productivity from delays
• $30,582 in other lost productivity
• $40,655 in lost quality of life

If a fatality is involved, add another 3 million dollars to the total. Mind you, this data was from 7 years ago. Take into account inflation and these direct and indirect costs will be even higher. The FMCSA has posted a table on their website that shows the additional revenue a motor carrier would have to generate to make up for those direct and indirect costs of an accident. As an example; if the company was involved in an accident costing $25,000.00 and has a 2% profit margin, that company would need to generate an additional $1,250,000.00 to cover the direct and indirect loss of that one accident. Here is the table for review:

Just by looking at these numbers you can see the cost of accident prevention is far more economically feasible than the resulting costs when a commercial motor vehicle accident does occur. In today’s lawsuit happy society with Accident and Injury liability attorneys advertising on every television and radio station, we cannot tolerate “business as usual” when dealing with commercial motor vehicle accidents. The take-away here is to do everything you can not to be involved with an accident in the first place.

Be Safe!

Steve