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The Injury Domino Effect – Six Accident Expenses that are Costing Your Company Money

- December 22, 2015 by John Virsack, ARM (View all posts by John)

As alarming as the workers’ compensation expenses listed on a loss report are, these only indicate the direct cost of the employee’s injury—which can sometimes be a fraction of the total cost of an accident Alarmingly, OSHA estimates that the Uninsured (Indirect) Costs range from three to twelve times the amount of Insured (Direct) Costs of a loss.

Six types of uninsured, or indirect expenses are:

  1. Wages paid for time lost by workers who were not injured, including employees who stopped work to watch, or who assisted after the accident, as well as employees who lost time because of the equipment they normally work on was taken out of production due to the incident.
  2. Damage to material or equipment, including. This would equipment items in a state of disorder, or out of service pending an investigation.
  3. Overtime work necessitated by the accident. The difference between normal wages and the overtime wages as well as the extra costs associated with operating equipment extra hours can add up quickly.
  4. Incident related paperwork. This could include the cost for processing workers’ compensation forms, the accident investigation and other time charges not directly linked to production.
  5. Decreased output of the injured worker after he returns to work. For instance, after an employee returns to work, if he receives a full wage but his production output may be reduced.
  6. The training time and the learning period for a new worker. Training takes time out of production that would not normally be taken and a replacement worker is not likely to produce at the same rate as the experienced employees.

As you can imagine, a business could have additional indirect costs not been listed here. Building a culture of safety can dramatically reduce the chances that an injury will spark a domino of costs, and improve employee morale. Our risk management consultants are available for free onsite consultations to see how we can help you develop the safest workplace possible.

To learn more, contact your local risk management consultant.