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How Much Do Workplace Accidents Cost Your Company?

On average, American employers pay a whopping $1 billion weekly as direct compensation costs for workplace injuries. That’s mind-boggling.

But there’s more to it than the staggering dollar value. There are numerous indirect costs that can significantly impact your company’s bottom line.

As we run through these costs, check if your workplace is designed to prevent injuries in the workplace, or is a disaster-in-waiting. For instance, you may notice the need to replace faulty equipment that poses danger to your workers. You can consider small business financing from Camino Financial to finance the replacement of such equipment.

Workplace accidents cost your company,  direct and indirect costs of workplace injuries can pack a punch against your bottom line.

In this article, we’ll look at the various direct and indirect costs of workplace accidents to your company and ways of preventing accidents.

Let’s dig in.

Direct and Indirect Costs of Accidents

With workplace incidents, accidents, and injuries, the resulting costs are either direct or indirect.

Direct Costs

Direct costs associated with workplace injuries refer to those expenses that arise from workplace incidents that are covered by insurance. This will include such items as the compensation premiums that are paid to the worker, the doctor’s fees, cost of medication, hospital bills, forthcoming medical expenses, ambulance costs, and other such costs.

Indirect Costs

These costs aren’t as obvious as the direct costs and may balloon to overrun the direct costs.

Main indirect costs include accident investigation, legal fees, loss of productivity due to employee absenteeism, the costs of replacing an injured employee, repair or replacement of damaged equipment and property, and the remedial measures to prevent future occurrences of accidents.

Lower Productivity

Note that the cost of replacing an employee may involve the hiring and training of a new person altogether. An inexperienced replacement may not match the output of an injured worker. There’s also lost production time as the worker recovers. Sometimes, serious accidents also lead to the temporal shutting off the production line to investigate the cause of the accident.

Employee Morale

There are other indirect costs that are even more subtle such as lower employee morale. Where a serious injury or death occurred, colleagues may be unmotivated and may even be psychologically affected lowering output. Some may opt-out of the company. This may in turn lead to delayed delivery of projects, and an impact on customer’s experience that affects the overall performance of the company.

OSHA Penalties

Then there are OSHA penalties and fines if investigations reveal negligence on part of the employer. These add to the cost of doing business but also give your organization poor publicity. Client’s will shun an organization that’s perceived to neglect the safety of its employees. That leads to a decline in revenue.

Although these costs are difficult to estimate in dollar value, they have an impact on the productivity, and profitability of your organization that cannot be overemphasized.

The Spiralling Costs of Workplace Injury

A medically consulted injury cost $42,000 on average while the average cost per death was $122 million.

These costs cover estimated wage losses, medical costs, administrative expenses, employer costs, and leave out the cost of damage to property, motor vehicles, and equipment.

Workplace injury and death have an unquantifiable pain to the family of the affected employee. No amount of money can replace a family member who died while on duty. Preventing injuries at the workplace is, therefore, not just a financial issue but a moral one.

Worker morale and work continuity are bound to suffer if workplace injuries become commonplace in an organization. In the extreme, industrial action as a result of perceived safety negligence by management can have ramifications on the organizations’ image.

In view of the cost of workplace accidents, you’ll want to ensure safety at work. You may need small business financing to ensure your equipment is upgraded and workers’ training on safety and procedures is up to date. You may also need small business financing to renovate old machinery so that it’s safe.


In a nutshell, workplace accidents could be costing you more in terms of time and money,  than you suppose, even if they’re a rare occurrence at your workplace. Invest in a safe working environment.