Modern workplaces are safer than they’ve ever been in history. But accidents still occur, and workplace incidents can impact your company’s bottom line in more ways than one.
In this article, we’ll look at the direct and indirect costs of accidents in the workplace. We’ll also review some steps you can take to minimize the potential for accidents on your properties.
Let’s get started.
The Direct Cost of Workplace Accidents
The direct costs of workplace accidents include any amount that your worker’s compensation insurance doesn’t cover, typically between $1,000 and $40,000 per incident, depending on your plan and the nature of your business.
An average of 2.8 out of every 100 workers are injured in a workplace accident annually. So you can figure out what your business’ direct cost of workplace accidents will be based on the number of people you employ.
For example, if you employ 1,000 people, your direct costs could be anywhere from $28,000 to $1.12 million.
Indirect Costs Can Extend Your Losses
But the direct costs of workplace accidents are only the tip of the iceberg. When someone gets injured, you don’t just have to pay for their healthcare. You’ll also likely see increased operating costs as a result of:
- Reduced productivity
- Damage to machines and equipment
- Time to train and/or hire a new worker to take the old one’s place while they recover
- Reduced morale among employees (which can lower efficiency)
- OSHA fines and penalties
- And other downstream effects of the accident
When you put it all together, you get a situation where the costs of an accident in the workplace can extend well beyond whatever you have to pay your insurance company for the event.
Insurance’s Impact on Accident Costs
Most companies consider workers’ compensation insurance as the big plan to keep in mind for workplace accidents. But it’s also important to consider your business personal property insurance options.
This type of insurance will give you coverage for things like:
- Equipment
- Inventory
- Supplies
- Furniture
- And even the cost of upgrades that you’ve made to your space
Business personal property insurance extends your protection from an accident beyond the direct costs of the incident and into the event’s indirect costs. So it’s certainly worth taking a look at if you want to make sure you have as much protection from workplace accidents as possible.
How to Reduce Workplace Accidents
Now that we’ve taken a look at how workplace accidents cost companies money, directly and indirectly, you’re probably wondering what you can do to minimize their occurrence.
There’s a ton of literature on this, but here are four cornerstone steps that should be part of every strategy for reducing accidents in the workplace.
Make Safety a Priority
A good safety plan starts at the very top. If you want your employees to care about workplace accidents, then you need to communicate the importance of these events to them.
Part of that communication process should involve letting your workers know which accidents could happen during their shifts. Developing this type of awareness will do a lot to help your employees be more careful while doing their jobs.
Invest in Continual Training
Many businesses give their employees a quick safety training during orientation and leave it at that. But if you want to reduce the accidents in your workplace, then safety training should be an ongoing occurrence.
Try to get into the habit of refreshing your employees’ safety training at least once per year. Doing this will ensure that workers don’t forget what they learned in their initial training and that they’re kept aware of any new risks they may encounter as your business and the machinery that it uses evolve.
Taking time out of your workers’ days to cover training may bring down your productivity and cost you money. But businesses that assign a safety officer to conduct regular training pay less for insurance. The practice will likely pay for itself if you can just avoid one workplace incident due to your increased training budget.
Conduct Inspections Regularly
One study found that workplaces with regular inspections reduce injury claims by 9.4% and workers’ compensation costs by 26%. That’s enough to start being more purposeful about your workplace safety inspections.
The frequency of inspections at your workplace will vary based on the work’s nature. For example, offices won’t usually need safety inspections as often as manufacturing warehouses do.
That being said, if your employees use any type of potentially dangerous equipment during their shifts, a check should be done before each shift begins to make sure that it’s still functioning properly.
Mandate the Use of Personal Protective Equipment
Finally, personal protective equipment like gloves, hardhats, and steel-toed boots can do a lot to reduce the damage done by an accident if one occurs. Ensure that your employees use this type of gear if your workplace is prone to accidents.