How to manage fleet accident costs
The true cost of accidents goes far beyond just repairs and insurance deductibles.
On average, approximately 20% of a company’s fleet will be involved in an accident this year -- each incident bringing a significant cost to the company. These expenses include direct costs such as medical bills and vehicle repairs as well as potentially significant indirect costs that may be hidden in your business’ blind spot.
The financial impact is striking. The Occupational Safety and Health Administration (OSHA), Washington, D.C., reported that motor vehicle crashes are costing employers $60 billion annually in medical care, legal expenses, property damage and lost production alone. The average crash costs employers about $16,500 and jumps to more than $74,000 for a crash with injuries and even $500,000 or more if there is a fatality.
That means a company with a fleet of 1,000 vehicles should set aside at least $3.3 million annually to manage the financial impact of accidents.
Calculating the true cost of a crash
The true cost of accidents goes far beyond just repairs and insurance deductibles. While most direct costs are typically covered by insurance, these expenses represent only a portion of the overall cost to your business. According to conservative insurance agency estimates, $1 of direct accident cost translates to approximately $3 of indirect costs. These indirect costs are often a challenge to identify and even more difficult to measure, but still affect an organization’s day-to-day operations and bottom line.
These “hidden” costs can take many forms, depending on the severity of the accident. A few of the more common ways accidents can affect a company include:
- Lost productivity
- Increased insurance premiums
- Significant exposure to legal liabilities
- Potentially permanent damage to your corporate image
- Diminished vehicle value
- Increased administrative burden
- Negative publicity
- Workers compensation claims
- Litigation expenses
- Employee morale
Do you know how much fleet accidents are really costing your business? Every time a driver gets behind the wheel, your company is vulnerable to repercussions that go far beyond just repairing a vehicle if not proactively addressing safety and driver behavior. To mitigate corporate risk and control accident costs, you must establish a corporate safety culture that protects employees and the business.
Capitalize on proactive driver optics
Most traditional driver safety programs are reactive in nature instead of proactive—an accident or driving infraction occurs, then corrective training is prescribed. Motor vehicle reports (MVRs) are pulled annually for each driver, but if an incident occurs in February and MVRs are run annually in January, another 11 months will pass without management visibility. Both practices are too little too late and still leave your company at risk.
A truly effective driver program is built on a foundation of monitoring driving habits in real-time. Rapidly evolving technologies such as telematics and advanced data analytics allow companies to quickly identify and address high-risk behavior to improve performance, minimize risk and reduce accident costs.
Understanding what behaviors your drivers are exhibiting on the road at any given moment empowers your company to quickly pinpoint who needs immediate training to help prevent accidents from happening in the first place. For example, if a driver exceeds the speed limit on a frequent basis, safety training can be assigned with the goal of reducing his/her speeding habit.
Data integration is giving companies real-time optics into areas they couldn’t track even just a few years ago. Now, it’s possible to combine a driver’s MVR, your corporate fleet policies, telematics data, driver risk scoring and accident data into a consolidated view of what’s actually happening behind the wheel. This seamless integration of data points delivers enhanced visibility, so that you can improve fleet safety and reduce the impact of accidents on the bottom line.
Drawing a roadmap to driver safety success
To effectively remove blind spots from your corporate safety culture, a successful driver safety program is both proactive and reactive. As you’re building your program, include the following elements:
Monitor MVRs on a consistent, ongoing basis rather than just annually.
- Move the fleet safety policy online and combine it with a program of online training modules to promote comprehension.
- Establish a personalized onboarding program for new drivers that includes a driver skills assessment program to identify poor driving habits and assign corrective training before an incident occurs.
- Monitor drivers through telematics and advanced analytics to identify high-risk behavior in real time.
- Prescribe online training modules to match specific driver weaknesses to improve behavior.
- Incorporate a scorecard once your program is well-established to encourage friendly competition among drivers and reward your safest drivers.
Discover the savings of a crash that never happens. By injecting technology into your driver safety program, you’re now less vulnerable to crashes you previously couldn’t see coming. Your company’s investment in safety for the long haul will open drivers’ eyes to their impact of their behavior, thus improve their performance, minimize risk and reduce accident costs.