Direct and Indirect Costs of an Accident  

Most of the iceberg that sank the Titanic was hidden below the surface. In a similar way, hidden costs of an employee’s job site injury could sink a business.

In the case of most icebergs, only one-eighth of the mass is exposed. In the case of a job site injury, however, as little as one-tenth of the ultimate cost may be apparent, leaving nine-tenths of it hidden and with potentially disastrous effects on a business.

To avoid such an occurrence, FNF employees must understand just how far-reaching job accident costs extend to other areas of FNF’s business. Only then can we understand how and why these hidden expenses sink profits and raise soft costs.

Direct Costs of an Accident

When an employee suffers a job-related injury or illness, the accompanying pain and discomfort are compounded by the immediate cost of treatment for the condition. Then may come the additional medical costs: physician and hospital bills, prescription medicine, occupational therapy, and medical equipment, such as crutches and wheelchairs. Most of these direct costs are covered by the workers’ compensation insurance policy that FNF must provide under law.

Indirect Costs of an Accidentcosts chart_safety.gif

An accident that causes a worker’s injury will often have costs that are absorbed with the operations.

Examples of hidden costs can include: 

-Damage to the vehicle or equipment the worker was using at the time. This could require expensive repair or replacement.

-Loss of the worker’s time. There may be loss of time by fellow employees and supervisors responding to the injury-causing incident, or transporting the injured employee to the medical facility. 

-Temporarily lowered morale, efficiency, and productivity by co-workers and supervisors.

-Cost of hiring and training a temporary or permanent replacement for the injured employee, with lower productivity during the hiring and training process. Also the other fellow employees that have to pick up the injured employees duties while he is absent from work (3 employees doing what takes 4 to do normally).

-The cost of Loss Control to investigate the accident, and communicate with the insurance company.

-The time it takes your supervisor to complete the accident report and communicate with Loss Control.

Other indirect costs include such factors as a surcharge on the company’s insurance premium if the accident throws FNF into a higher risk category. Other costs may include civil or criminal penalties imposed by state or federal officials if the accident is found to have resulted from flagrant violation of workplace safety requirements.

Studies have shown that such indirect costs usually total three to four times the direct costs of the accident and could amount to as much as 20 times the direct costs. Not many businesses could withstand such a hit to their bottom line, including FNF.

Benefits of a Job Site Safety Policy

Job safety is a real bargain when compared with the vast expenses associated with a work-related accident. To protect the health of all FNF employees, and the wellbeing of FNF’s bottom line, implement our job safety policy. The ultimate goal of the job safety policy is to communicate to all employees that worker safety is important, is supported by management, and is valued by FNF.

Please take the time to communicate these costs to all of our employees. Keep up the good work, and be SAFE out there.