How Much Could Distracted Driving Be Costing Your Company?

How Much Could Distracted Driving Be Costing Your Company?

Tags: Fleet, Employee Distracted Driving, Financial Impact

It’s a call you never want to get at the office. “We’ve had another crash.” “Is everyone OK?" "What are the damages?" "How much is this going to cost us?" All of these questions rush through your mind. Maybe those calls are coming more frequently in your company. It’s a trend being observed by companies around the world.

The past several years have seen some of the sharpest increases in traffic crashes in decades. Of the nearly 5.4 million commercial crashes that happen annually, nearly 40% are caused by distracted driving. According to a recent study by Great American Insurance, crash rates are at the highest levels in decades: 19% in rural areas 25% in urban areas, and 41% for high-exposure cities.

Based on the statistics, it’s not a matter of if your company will experience financial loss due to distracted driving, but when. Based on a 2015 report from the Network of Employers for Traffic Safety (NETS), distracted driving crashes had an $8.4 billion direct financial impact on employers. What is your company’s share of that financial loss? As one who has the most insight into the cost centers in your company, you know how quickly expenses can grow when dealing with a workplace accident. That’s why it’s important to understand just how much distracted driving could be costing your company.


Vehicle/Property Damage

While it’s the first thing you may see when approaching the scene of an accident, your business’s damaged vehicle will likely beProactive_Approach_to_Health_and_Safety_2 the smallest hit to the company balance sheet. According to NETS, the average damage costs for a Property Damage Only (PDO) crash accounts for $5,890. But when larger or more complex vehicles are involved, vehicle and property damage costs can increase dramatically. Based on Federal Motor Carrier Safety Administration (FMCSA) estimates, PDO crashes involving class 3-8 vehicles was $18,000. You can imagine the cost of repairing or replacing a heavy-duty truck or specialty vehicle with a $250,000+ price tag can be quite costly.


Crashes Resulting in Injury or Death

crash_medical_smallVehicular damage may be the least of your worries. According to the Insurance Research Council’s 2017 study of nationwide auto crash injury claims,  medical expenses accounted for 79 percent of all claimed economic losses. In fact, non-fatal injury crashes can be 10x more costly than PDO crashes. The Bureau of Labor and Statistics has found that vehicular crashes account for the majority of workplace fatalities. And as you can imagine, costs associated with vehicle crash fatalities rise exponentially. A fatal crash is 10X more costly on average than a non-fatal injury. Moreover, in a separate study, the AAA Foundation for Traffic Safety found the cost of a fatal crash could as much as $6 million.


Fines and penalties

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Tickets for distracted driving as well as fines and penalties vary from a local, state and national level. Tickets and fines can range in price from $20 in some states, like Alabama, and climb up to $10,000 per incident in Alaska. Those totals don’t begin to take into account Federal Motor Carrier Safety Association (FMCSA) penalties levied against drivers of commercial motor vehicles for distracted driving. Truck drivers caught using their phone while driving are personally fined $2,750, and their employers are fined $11,000 for requiring or allowing use of a cell phone.


So what do all these stats and figures mean for your company? If we use the data outlined by NETS and assume a $5,890 average cost for PDO crashes (the most common crash type), and an average annual crash rate of 20%, a fleet of 1,000 vehicles averages financial losses of $1,178,000 per year for property damage crashes alone. However, the financial losses of distracted driving can go far beyond vehicle or property repair or employee rehabilitation in the case of non-fatal injury crashes. You should also consider the cost of lost or destroyed customer cargo, lost productivity and increased insurance premiums, not to mention the opportunity costs of having a valuable vehicle off the road and out of service. So it’s important to understand the total financial impact and exposure to your company. This way you can place a value on solving the business problem of distracted driving.

 

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