It’s safe to say that everyone knows commercial fleet accidents are a bad thing and that they come with negative consequences. However, the real depth of those consequences is rarely understood. In order to determine which technology will best help to mitigate the risk of accidents, you first need to understand the true cost of a commercial fleet accident.
Accidents have lasting negative effects on companies. Beyond the obvious financial impact, the overall productivity of the company can suffer, the customer experience can degrade over time, the health of anyone involved in the fleet collision can be impacted, and the repairs and downtime of a commercial motor vehicle can create a ripple effect of challenges.
Vehicle damage and financial consequences are guaranteed with commercial fleet accidents; however, there is a deeper layer of costs associated with accidents that must be planned for. These “below the line” costs are less obvious, but inevitable.
Direct costs of fleet collisions
Direct costs are relatively easy to identify and can be determined quickly after an accident. These are the immediate costs for medical attention for the people involved as well as the costs of repairing damage to the vehicles. This is just the tip of the iceberg in terms of accident costs.
- Property: vehicles and associated collateral damages ($26,081 per incident according to this OSHA estimate)
- People: medical attention for the people involved in the crash ($78,418 per person according to the same OSHA study
Indirect costs of fleet collisions
Indirect costs evolve slowly after an accident and the result of exposure to additional costs associated with an accident. Examples of evolving costs are:
- The decrease in value of damaged vehicles.
- Attracting, hiring, retaining, and training replacement drivers in the event that the original driver was injured and cannot continue duties.
- Increased commercial auto insurance rates.
- Potentially negative settlements or “nuclear verdicts”.
Intangible costs of fleet collisions
Intangible costs are longer term effects caused by the accident. While not as obvious as costs associated directly with the accident, these costs are tied to the lasting effects on employees, management, and administration of the company. Examples of intangible costs include:
- Increased administrative burden
- Loss of vehicle/driver ability
- Decrease in employee morale
- Lost business resulting from the inability to deliver expected level of service
- Bad reputational hits
While it is difficult to associate dollars with indirect and intangible costs, there are clearly negative financial consequences associated with each category of damage. With an estimated 10% -20% of fleet vehicles being involved in accidents each year, it’s critical for commercial fleets to focus on safety protocols. Each of the above categories of cost should be understood so that a determination of fleet safety technology’s value can be more easily calculated and understood.
Why Total Cost Matters
Beyond the direct costs associated with a fleet collision, there are a whole host of other indirect and intangible costs that can haunt the employer for many years to come. When looking for solutions to lower their crash frequency and severity, a fleet operator should strive to measure the ROI for these solutions by considering the true overall cost avoidance (direct + indirect + intangible) versus the cost of the solution(s) being considered.
