Indirect Costs

You need workers compensation insurance to operate your business. But the more accidents you have, the higher your premium will be – and the lower your profit margins.

The impact of higher premiums can be felt on the customers’ end as higher prices for your goods and services. Studies have shown that the hidden costs of workers compensation can be 4 to 5 times greater than the direct costs.

Some of the hidden costs include:

$  Lost productivity of your injured worker.
$  Lost productivity and morale of surrounding workers.
$  Time spent investigating the accident and processing related paperwork.
$  The cost of temporary help or training for substitute workers.
$  Incidental costs of interrupted production.
$  A potential OSHA investigation

According to one study, to make up for a $2,000 accident:

  • A soft drink bottler would have to bottle and sell 244,200 cans of soda
  • A food packer would have to can and sell over 944,000 cans of corn
  • A bakery would have to bake and sell over 952,000 donuts
  • A butcher would have to process and sell about 268,000 pounds of hamburger

How much more product would you have to sell just to cover your profit when an employee suffers a Workers Comp claim?

The Cost of an Accident at:

1% Profit Margin

2% Profit Margin

3% Profit Margin

$1,000

$100,000

$1,000

$50,000

$1,000

$33,000

$5,000

$500,000

$5,000

$250,000

$5,000

$167,000

$10,000

$1,000,000

$10,000

$500,000

$10,000

$333,000

$25,000

$2,500,000

$25,000

$1,250,000

$25,000

$833,000

$100,000

$10,000,000

$100,000

$5,000,000

$100,000

$3,333,000

Do the math. How much does it really cost you when an employee suffers a workers comp claim?

Now when you say “Safety Pays” you can translate that into real dollars. Communicate those real costs to your employees and share the wealth for those accident-free days. When your employees practice safety, they can put those hidden dollars into your pocket.

See just how much safety pays with OSHA’s $afety Pays cost calculator at https://www.osha.gov/dcsp/smallbusiness/safetypays/estimator.html. The calculator shows you what claims will cost in real dollar value.