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Costs of Accidents


MSHA would like to thank the Occupational Safety and Health Administration (OSHA) for this material. You may visit their site on Safety & Health Payoffs "Why do I Need a Safety and Health Program?" at http://www.osha.gov/SLTC/etools/safetyhealth/mod1.html

The estimates generated on this page are based on figures provided by the National Safety Council.


Did you know Accidents are more expensive than most people realize because of the hidden costs. Some costs are obvious — for example, Workers' Compensation claims which cover medical costs and indemnity payments for an injured or ill worker. These are the direct costs of accidents.

But what about the costs to train and compensate a replacement worker, repair damaged property, investigate the accident and implement corrective action, and to maintain insurance coverage? Even less apparent are the costs related to schedule delays, added administrative time, lower morale, increased absenteeism, and poorer customer relations. These are the indirect costs — costs that aren't so obvious until we take a closer look.

See the tables below for a quick way to estimate the annual cost of accidents in your workplace.

I. ESTIMATED ANNUAL ACCIDENT COSTS

  Enter   Results
Annual number of occupational deaths × = $ 
Annual number of lost workday cases × = $ 
Annual number of reportable cases without lost work days × = $ 
Total estimated annual cost of occupational deaths, injuries and illnesses = $

Calculate Part I

*Using National Safety Council average costs for 1998, includes both direct and indirect costs, excludes property damage.

II. IMPACT OF ACCIDENTS ON PROFITS AND SALES     (Compare accident costs to company profits)



Sales Volume: $ (Enter)

Profit Margin: % (Enter)

Sales Volume × % Profit = Annual Profits: $ (Result)

Accident Costs (Estimated or Actual): $ (Result or Enter)

Accident Costs as a Percent of Profits: % (Result)

**Amount of Sales Needed to Replace Lost Profits: $ (Result)
   (If profit margin is 5%, then it takes $20 of sales to replace every dollar of loss)

Calculate Part II

** Not all indirect costs will impact a company's bottom line on a dollar for dollar basis. Therefore, using all indirect costs within the calculation overestimates the amount of sales needed to replace lost profits. Likewise, only using direct costs in this comparison would underestimate the amount of sales needed. Actual costs will be somewhere in between the two figures.




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