This blog post is the 3rd in a series of five blog posts about creating driver engagement.
When exploring the total cost of a truck accident and how it can affect your company, we need to explore past the basic surface costs, as the answer to this question is much deeper than you may realize. First, we have to recognize that there are many types of costs associated with an accident, starting with visible (direct) costs and hidden (indirect) costs. Further, there are human, psychological, and environmental costs which not only impact your workforce but our total economy, too.
Visible and Hidden Costs of a Truck Accident
Let's start with the basics by listing out the surface costs that your company will feel when a driver is involved in a truck accident:
The Visible (Direct) Costs of a Truck Accident
- Cargo Damage
- Vehicle Damage
- Injury Costs
- Medical Costs
- Loss of Revenue
- Administrative Costs
- Cost of Insurance Increases
- Towing Costs
- Storage of Damaged Vehicle
The Hidden (Indirect) Costs of a Truck Accident
- Loss Clients or Customers
- Lost Sales
- Meetings Missed
- Salaries Paid to Employees in Accident
- Lost Time at Work
- Cost to Hire or Train Replacement Workers
- Loss of Personal Property
- Vehicle Replacement
- Damaged Equipment Downtime
- Accelerated Depreciation of Equipment
- Accident Reporting
- Medical Costs
- Poor Public Relations & Publicity
- Increased Public Relations Costs
- Government Agency Costs
How Much Revenue is Lost with a Truck Accident?
The answer to this question is nothing short of staggering. Hidden or indirect costs can be four to ten times greater than the visible or direct costs. It is absolutely crucial for companies to realize the incredible impact of hidden costs of a truck accident and not to mention, the amount of revenue that must be generated to make up for lost profits from these hidden costs.
A recent article in the Business Report stated that if you take the average cost per truck accident, which is $148,279, as provided by the Federal Motor Carrier Safety Administration, it would take additional revenue of $7,413,950 to pay the costs of the accident, assuming an average profit margin of 2%. The amount of revenue required to pay for the costs varies inversely to the profit margin. Further, the cost of a truck accident with a fatality is considerably higher at $7,633,600.
The cost of a truck accident is a controllable cost that can directly affect the company bottom line. When profit margins are tight and competition is intense, the ability to control accidents is vital. The importance of an improved workforce safety initiative, which would result in reduced accidents and injury costs, results in taking a substantial amount of money back to the bottom line.
Impact on Public Relations
In addition to the costs mentioned above, and with the rise of Social Media's influence on spreading the negative publicity and poor public relations, a further impact can be made on a company's goodwill. The 2014 crash involving a Walmart company truck and a limousine carrying comedian, Tracy Morgan, leaving one dead and several injured in the crash, as well as the pending lawsuit, has been a public relations nightmare for Walmart.
As you can see, the true costs of truck accidents can be staggering, but not just direct costs, but also in indirect costs, too. Any methods that can be used to decrease these accidents has the potential to have a considerable positive impact on a company’s bottom line and overall image of the company.
At C.A. Short Company, we are your partner for increased employee engagement resulting in increased performance outcomes to grow your bottom line. Our process and research-based platform helps you engage your team in order to increase your bottom line, motivate your staff to the benefit of the entire organization, and reward your people for the positive changes they make. To request a Complimentary Consultation, please click here.