THIS TABLE SHOWS THE DOLLARS OF REVENUE REQUIRED TO PAY FOR DIFFERENT AMOUNTS OF COSTS FOR ACCIDENTS
| It is necessary for a motor carrier to generate an additional $1,250,000 revenue to pay the cost of a $25,000 accident, assuming an average profit of 2%. The amount of revenue required to pay for losses will vary with the profit margin. | |||||
| YEARLY ACCIDENT COSTS | PROFIT MARGIN | ||||
|---|---|---|---|---|---|
| 1% | 2% | 3% | 4% | 5% | |
| $1,000 5,000 10,000 25,000 50,000 100,000 150,000 200,000 |
100,000 500,000 1,000,000 2,500,000 5,000,000 10,000,000 15,000,000 20,000,000 |
50,000 250,000 500,000 1,250,000 2,500,000 5,000,000 7,500,000 10,000,000 |
33,000 167,000 333,000 833,000 1,667,000 3,333,000 5,000,000 6,666,000 |
25,000 125,000 250,000 625,000 1,250,000 2,500,000 3,750,000 5,000,000 |
20,000 100,000 200,000 500,000 1,000,000 2,000,000 3,000,000 4,000,000 |
| REVENUE REQUIRED TO COVER LOSSES | |||||
Accident costs (direct + indirect) consist of any or all of the following:
Direct Costs:
- Cargo Damage
- Vehicle Damage
- Injury(s) Costs
- Medical Costs
- Loss of Revenue
- Administrative Costs
- Police Report
- Possible Effect on Cost of Insurance
- Possible Effect on Cost of Workmen’s Compensation Insurance
- Towing Costs
- Storage of Damaged Vehicle
Indirect (Hidden) Costs:
- Lost Clients/Customers
- Lost Sales
- Meetings Missed
- Salaries Paid to Employees in Accident
- Lost Time at Work
- Cost to Hire/Train Replacement Employees
- Supervisor’s Time
- Loss of Personal Property
- Replacement Vehicle Rental
- Damaged Equipment Downtime
- Accelerated Depreciation of Equipment
- Accident Reporting
- Medical Costs Paid by Company
- Poor Public Relations/Publicity
- Increased Public Relations Costs
- Government Agency Costs