Identifying Direct and Indirect Costs of Fleet Accidents

Fleet accidents can be costly. If you put non-CDL drivers out on the road, you face the risk of emptying out your pockets. Even a small accident like a fender bender or clipped mirror can cost thousands of dollars.

The problem is, most companies don’t see it this way. That’s because there are both direct and indirect costs for fleet accidents. Let's explore both and how to reduce them.

What Does an Accident Cost You?

Your drivers face a high risk of causing or being involved in an accident.

Look at it this way: The average person drives about 15,000 miles every year. And, each year, they have a one in 15 chance of getting into an accident. Your drivers are on the road much more than the average person. That means their risk of a collision is higher. They could have a one in 10 chance of being involved in a collision or something even worse.

What’s more is these accidents are costing you.

One accident will cost your company anywhere from $16,000 to $75,000, even if it’s minor and no one’s hurt. That number skyrockets if there is a fatality involved. And guess what, you’re still paying even if it wasn’t your employee’s fault.

Direct and Indirect Costs of Accidents

The figures we shared may seem a bit high to you. It’s hard to imagine a minor accident costing you tens of thousands of dollars, especially if you aren’t fined. That’s because there are both direct and indirect costs to accidents.

Direct costs of accidents are what you pay immediately. Indirect costs are the ones that sneak up on you.

The Direct Cost of Fleet Accidents

Here are some common direct costs of fleet accidents. These are the obvious costs, but still, they add up quickly.

• Vehicle repairs
• Repairs to property damage
• Fines resulting from your employees’ having a traffic violation
• Legal representation
• Court fines
• OSHA fines
• Insurance deductible and premiums
• Workers’ compensation injuries not covered by insurance

These costs alone are enough to make a dent in your profit margins. However, the cost of loss doesn’t stop there.

The Indirect Cost of Fleet Accidents

You pay out of pocket when you have an accident. However, accidents are more damaging to your company than just the direct, upfront costs. The indirect costs of an accident spread like a spider web throughout your company.

Consider the following:

• Increased insurance premiums and deductible
• Administrative time spent by supervisors, safety personnel, and administrative employees dealing with the accident
• Loss of time from the employee who was involved in the collision
• Training a replacement driver if necessary
• Lost productivity due to rescheduling
• Damaged reputation and the ensuing loss of business
• Depending on your business model, loss of business for not getting to a customer location

These costs are often ignored or unmeasured, but make no mistake about it — they’re present and they are impacting your business.

Accidents Are Preventable

The cost of fleet accidents can pile up and overwhelm you and your company. However, there’s good news in all of this. Accidents are preventable.

People have accidents when they take too much risk, when they drive unsafely, and when they don’t know proper defensive driving techniques.

We shared some statistics earlier about how your employees could have as much as a 1 in 10 chance of causing a collision. Those statistics go out the window if you invest in defensive driving training for your non-CDL or light-duty vehicle drivers.

It’s possible to reduce your accidents to zero.

About the Author: John Kuder is a senior instructional designer at Avatar Fleet, the creators of the non-CDL safety training course, The Fleet Safety Course.