The real cost of an accident
Managing the finances of a business means always being prepared for the unexpected. For companies managing fleets, that involves accounting for the chance of accidents.
Crashes are never 100% preventable, so understanding the financial risks ahead of time is key.
In 2015, the NZ Ministry of Transport estimated the total social costs of accidents over the course of the year to be $3.79 billion, which includes costs from driver injury, repairs, and productivity losses.
The threat is real, but awareness of hidden accident costs will help equip you to limit the financial harm to your company.
In this blog, we’ll talk about what some of those lesser-known expenses are, and how to reduce the risk of budget blowouts.
Hidden costs of accidents
Here are some accident costs that can do severe undercover damage to a corporate asset account, from behind the scenes:
When collisions happen, insurance claims follow. While it’s perhaps the clearest expense you’ll see in the red, the costs can get out of hand over time.
For one, the excess owed by your company increases as incidents get more complicated. Larger vehicles demand a higher excess, and the costs pile on if important work equipment or client belongings were damaged in the crash. One incident can very well approach or exceed $10,000.
Then there’s the likelihood of rising premiums. When insurers react by raising rates, it means one major incident can cause future crashes to be even more expensive — an important risk to account for.
Fleet incidents, on one level or another, translate to shortcomings in service to your customers. That, in of itself, means lost business income. Disappointed customers are often difficult to win back, and fixing key client relationships can require a lot of money and resources.
Add to this the potential need for new public relations programmes to rebuild your company’s reputation, as competitors might be quick to scoop up the business your company loses due to fleet accidents.
Health and Safety actions
Collisions represent potential employee injuries, ranging from minor cuts and scrapes all the way to fatalities. Not only might emergency medical costs be part of the picture, but under legal Health and Safety obligations, your business may be found liable. High attorney fees could also be part of the equation.
Prosecutions under H&S rules can exact such a heavy toll that it can spell the end of a small business.
Employee absence following a crash can affect a business deeply. Instant productivity losses from driver downtime can ‘pull away’ admin resources from activities that directly build revenue.
Depending on how much time your fleet driver needs to recover physically and mentally, other fleet drivers may have to work overtime to compensate, or new drivers might have to be hired and trained. Whether that turns into recruitment costs, overtime pay, or even hiring a contractor, it’s another blow to the budget.
How to avoid massive budget blowouts over accidents
While accident expenses can quickly balloon out of control, there are a few key things you can do to curtail the costs:
Select fleet vehicles with advanced driver safety technologies.
Vehicles featuring advanced driver assistance systems (ADAS) are attractive options for fleet business looking to control incident costs. The vehicles might cost more up front but could offer good returns in the form of fewer crashes.
Autonomous emergency braking (AEB), camera-aided parking, blind spot monitoring, and rear cross traffic alerts all are effective ways of protecting your drivers, lowering accident risk, and ultimately lowering costs.
Outsource your accident management.
Managing all possible accident costs - both seen and unseen - can be an overwhelming job for an in-house team. Fortunately, outsourcing is an option and is perhaps the best one for a fleet-dependent business.
Strong accident management programmes include thorough reporting, immediate lodgement of claims and handling of third-party needs, and 24/7 roadside assistance for your drivers...all of which can substantially lower accident costs.
Work with experts like SurePlan.
In addition to full-featured accident management, SurePlan can help your business implement driver training, create risk-lowering fleet policies, and get started with transparent reporting technologies to nip future incidents - and the costs that come with them - in the bud.
With the help of a partner like SurePlan, your business can hold on to more hard-earned revenue, and as a result, stay in better shape over time.
Check out our ROI calculator to see how much your business can save with SurePlan accident management.