Between slips, falls, strains and equipment accidents, employers pay a lot of money. Having a good workers' compensation insurance policy helps. Still, costs can skyrocket if you aren’t prepared for accidents. To be safe, you’ll need to understand the ins and outs of workers' compensation insurance itself.
You might have a safe workplace. You might have safe workplace rules and regulations, too. If you don’t know the hidden factor driving most costs, however, you won’t be as prepared as you should be. At the end of the day, a claim’s driving cost factor isn’t injury. It’s time.
Why Occupational Injuries Get Expensive
A workers' compensation claim’s driving expenses are generally straightforward: medical costs. They also include indemnity—or wage replacement payments. An insurance company will cover some of all these costs. Still, these dollar amounts factor into your plan’s modifications.
Occupational injuries trigger an employer’s workers 'compensation policy. While the above-mentioned direct costs can be easy to gauge, indirect expenses exist.
Major Indirect Costs
A study conducted by the Stanford University Department of Civil Engineering measured these indirect costs. Their findings: Indirect costs, in most cases, exceed direct costs. A broken bone in the workplace might hit a business $50,000 in direct costs. Still, a hidden $55,000 expense might be waiting around the corner.
Major indirect costs include:
- Wages paid to absent employees.
- Wage costs related to an injury’s resulting work stoppage.
- Lost productivity due to administrators handling the claim.
- Lost workplace productivity due to rescheduling.
- Equipment repairs and replacement due to the claim.
The Impact of Time
It’s easy to see why time costs the most money. While your business handles the main costs of a workers' compensation insurance claim, it might struggle with the claim’s aftermath. Even worse: Your workers' compensation insurance policy may not cover these costs.
Overcoming the Time Cost Factor
While few things can pay for claim’s every expense, you can still work to reduce their severity. Treat your workers' comp insurance as a finance tool, rather than a fix-all policy.
The only way to lower claim costs is to reduce the number of claims themselves. Once you’ve done everything possible to cut the chance of a claim, pursue the next goal: claim severity reduction.
Severe injuries take a lot of time to heal. In many cases, severely injured employees never return to work. Make sure you have a good workers' compensation policy. It'll prove instrumental in someone's recovery. But, don’t forget about your business’s foundation: its people. They're the ones you should look out for first.