Direct and Indirect Costs Involved in Workplace Accidents

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Accidents are among the worst things that can happen at your workplace. Things can be even worse if you are running a workplace that is especially dangerous.

For example, if the work space you are running is in a warehouse, the likelihood of a workplace injury is higher than if you were running an office. That’s why it’s important to follow some business safety tips.

Whenever there’s an accident in the workplace, there are indirect and direct costs to your business. Keep reading to educate yourself about these costs.


Direct Costs of the Accident

Of course, the first costs you need to think about are the costs that come directly from the accident itself. Generally speaking, direct costs of a workplace accident include compensation payments and medical costs such as the costs of hospital stays and ambulance rides.

While insurance will pay most of the direct costs, your business will likely need to absorb most of the indirect costs of accidents, those costs that are outside of direct medical and compensation costs.

Indirect Costs of the Accident

The insurance company that pays the direct costs most likely won’t be the same as the one that covers your indirect costs. Further, indirect costs will be hidden below the surface. Here are some of the indirect costs to watch out for when accidents occur in your workplace:

Time Away from the Job

The injured worker might have to be away from the job for longer than the amount of time that is covered by workers’ compensation. When that happens, it’s going to cost your company. There are usually only a certain number of days that are covered by workers’ compensation insurance.

Other Workers

Accidents can affect other workers besides the injured parties. For instance, other workers might have spent time helping and looking after the injured worker, even if they themselves weren’t hurt in any way. Additionally, other workers might have to do the injured worker’s job in order to be able to complete their own jobs.

Equipment Losses

Equipment is often involved when there’s a workplace accident, and insurance might not cover all of the costs for replacement or repair of any damaged equipment.


You might need to pay other workers overtime in order to stay on top of production schedules.


The supervisor who was on the floor at the time of the accident will need to investigate its causes. That person will need to then complete the appropriate paperwork. This all amounts to his or her time lost on the company’s actual work. Additionally, this person is going to have to take the time to figure out how to get everything back on track.

Further, when one person gets injured while at work, it disrupts the entire normal process. Very likely, you’ll need to rearrange employees, find a temporary employee to fill the injured person’s spot, or retrain other employees to get everything up and running again. The costs relating to this disruption can add up quickly.

Other employees will lose productivity as well, when they have to take time to work on processing claims and handling phone calls to insurance companies, emails to the injured person, and so on.

Then too, your other employees are going to be wary about working after a workplace accident has occurred, at least for a while. It could take them longer to do their normal jobs. Additionally, they’ll probably spend spend at least some of their working time talking with other workers about the accident. All of this adds up to lost wages and lost productivity in the end.

Uncovered Medical Claims

There could be medical costs that your insurance won’t cover. Extreme injuries, for example, might not be fully covered, depending on your insurance plan. Your business might have to shoulder the costs of specialized treatment facilities or medical personnel if your insurance company doesn’t.

Legal Costs

You might also have legal costs associated with a workplace accident. Additionally, you might have to make some changes in your workplace so that a similar accident doesn’t happen.


When it comes to the costs associated with workplace accidents, there are both indirect and direct costs. Your insurance will cover most of the direct costs. However, the indirect costs will most likely come out of your company’s profits.