Costs
of accidents
The
occurrence of any accident will cause both direct and indirect costs.
It is important that all of these costs are taken into account when
the full cost of an accident is calculated. Different studies shown
that indirect costs or hidden costs could be more than 30 times
greater than direct costs of an accident. In other words, the direct
costs of an accident or disease represent the tip of the iceberg when
compared to the overall costs.
Direct
costs
These
are costs that are directly related to the accident and may be
insured or uninsured.
Insured
direct costs, normally include:
- claims on employers and public liability insurance
- damage to buildings, equipment or vehicles
- any attributable production and/or general business loss.
Uninsured
direct costs, normally include:
- fines resulting from prosecution by the enforcement authority
- sick pay
- some damage to product, equipment, vehicles or process not directly attributable to the accident (e.g. caused by replacement staff)
- increases in insurance premiums resulting from the accident
- any compensation not covered by the insurance policy due to an excess agreed between the employer and the insurance company
- legal representation following any compensation claim.
Indirect
costs
Indirect
costs are costs which may not be directly attributable to the
accident but may result from a series of accidents.
Insured
indirect costs, typically include:
- a cumulative business loss
- product or process liability claims
- recruitment of certain replacement staff.
Uninsured
indirect costs, can include:
- loss of goodwill and a poor corporate image
- accident investigation time and any subsequent remedial action required
- production delays
- extra overtime payments
- lost time for other employees, who attend to the needs of the injured person
- the recruitment and training of most replacement staff
- additional administration time incurred
- lower employee morale possibly leading to reduced productivity
Some
of the items mentioned above, such as business loss, may be
uninsurable or too prohibitively because of the big amount of money
required.
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