How your business can combat the rising cost of vehicle crashes


how to combat rising cost of vehicle crashes

It’s no surprise to any of us: the annual number of traffic accidents is rising. As of last year, the number of traffic fatalities reversed its downward trend, rising by nearly 10 percent. Medical care costs and vehicle repair costs are rising as well. How can your business combat the rising cost of vehicle crashes?

First, let’s get a few more unpleasant facts out of the way:

  • Annual accident count: There are an average of six million car accidents in the U.S. every year
  • Property damage:
    • 72 percent of accidents result in property damage
    • Average cost of each claim for damage alone is $7,500
  • Injury:
    • 27 percent of accidents result in injury
    • Three million Americans are injured in traffic accidents annually; two thirds of those experience permanent injuries
    • Average cost for nonfatal disabling injury: $61,600
  • Fatality:
    • 90 people die in a traffic accident every single day
    • Six percent of accidents result in a fatality
    • Average cost for a death due to vehicle accident: $1.1 million

And if those facts aren’t sobering enough, consider this: Those 27,000-plus daily accidents cost us $871 billion every year in lost productivity, property damage, medical bills, legal fees, and other expenses, according to a study by the National Highway Traffic Safety Administration (NHTSA).

In 2019-2020 (latest figures available), vehicle crashes were the leading cause of work-related fatalities, accounting for 22 percent of all workplace fatalities, according to the National Institute for Occupational Safety and Health (NIOSH).

In order for your business to be successful at keeping your vehicle claims costs down, we first have to address what’s causing – and what’s contributing to – all of these accidents.

What’s causing these accidents?

Every study we reviewed named the Big Three: distracted driving, intoxication and speeding. The National Safety Council estimates that one in four crashes involves a cell phone, as drivers text, talk, check roads and weather, take selfies and more. In fact, you’re 23 times more likely to be involved in a crash if you’re texting while driving – yet 33 percent of us admit to doing so.

“The incredible connectivity enabled by technology has resulted in a very dangerous environment behind the wheel,” Deborah Hersman, NSC chief executive officer told Consumer Affairs, as reported by a Fortune article. “While the public understands the risks associated with distracted driving, the data shows the behavior continues – we need better education, laws and enforcement to make our roads safer for everyone.”

Reading or sending a text takes a driver’s eyes from the road for 4.6 seconds, which is equivalent to driving the entire length of a football field with your eyes closed.

Driving “under the influence” accounted for 31 percent of U.S. motor vehicle fatalities in 2014 (latest statistics available), says Insurance Information Institute. Every day, 28 people in the United States die in motor vehicle crashes that involve an alcohol-impaired driver: that’s one death every 53 minutes, says the National Highway Traffic Safety Administration (NHTSA). The annual cost of alcohol-related crashes totals more than $44 billion. Marijuana users were about 25 percent more likely to be involved in a crash than drivers with no evidence of marijuana use.

Related: How to minimize employer risk for drugs in the workplace

Speeding contributes to 28 percent of all traffic fatalities, says NHTSA, costing Americans $40.4 billion each year. Some 36 percent of 15 to 20-year-old male drivers who were involved in fatal crashes were speeding at the time of the crash.

Those aren’t the only causes: Fatigue causes an estimated 21 percent of fatal crashes, 13 percent of severe injury-causing crashes and six percent of all crashes, according to an AAA Traffic Safety Foundation study.

Aggressive driving is another prime culprit for the rising cost of vehicle crashes. Defined as committing a combination of moving traffic offenses, from racing to ignoring traffic signs or failure to yield right-of-way, thereby endangering other persons or property, road rage is a growing problem in every state. Aggressive driving played a role in 56 percent of fatal crashes in a recent four-year period, with excessive speed being the number one factor, says NHTSA.

Related: Checklist for hiring safe drivers

While we’re all delighted to pay less at the pump, lower prices are indirectly contributing to the problem. With cheaper fuel prices, more people are on the roads. That means more of us are exposed to the risk of an accident, whether it’s caused by us or the other guy, leading to rising costs in vehicle crashes.

What’s exacerbating the problem?

Now that we’ve hit the high (or rather, low) points on the main causes of accidents, let’s talk about what’s behind the rising costs for vehicle crashes. In other words – not only are the number of crashes and claims rising, but also the cost per claim. On average, insurance claim costs for bodily injuries rose 42 percent and collision coverages, 17 percent during the past decade. These costs are at all-time high, according to a article.

Today’s vehicles have a higher degree of sophistication, increasing their repair costs. Gone are the days of simple mechanical adjustments under the hood. Now everything is connected to a high-tech computer that requires repair shops to have advanced diagnostic tools run by more highly trained mechanics – costs that are passed along to the consumer.

Health care costs are escalating as well, as we read almost daily. Rising costs for drugs, procedures, tests and equipment all contribute to higher injury claims.


How to combat the rising cost of vehicle crashes

There are a number of ways you can help hold down your commercial vehicle claims costs:

  • Report your auto claim as soon as possible. Our recent data shows that auto accidents which are reported the same day result in claims costs far below those from a claim where the insured waited a few days to a month to report it ($558 for auto property damage claims reported the same day vs. $4,396 for a claim filed up to a month later).
  • Train drivers so that they know what to do in the event of an accident; equip vehicles with an accident reporting kit.
  • Make sure vehicles are maintained according to the manufacturers’ requirements.
  • Carefully vet your drivers against your safe driver criteria.
  • Consider the use of telematics tracking as part of your fleet safety program: by monitoring driver activities such as speeding, hard braking, seat belt use, etc., you can improve safe behaviors.
  • If employees use their own vehicles in your business, you need to establish a written policy for these drivers. Read more at Tips for using employee-owned vehicles in your business, such as reviewing their motor vehicle records on a regular basis
  • Include driver safety performance and awareness as part of your loss prevention plan through training, incentives and defined accountability for unacceptable performance


Dealing with the rising costs of car crashes
Infographic: Car accident statistics in the U.S.
Why this could be the deadliest driving year in nearly a decade
Impaired Driving: Get the Facts

This article originally appeared in a blogpost on our Tribal Program website, but has been updated and modified to better fit the needs of ACM’s self-insured clients.