The Full Cost Of A Car Accident, And What It Means To The Insured

A new report from the National Highway Transportation Safety Administration (NHTSA) estimates that the economic costs of car accidents in the US were at around $277 billion in 2010, a 20 percent increase over the 2000 figures.

To the individual, that’s like the equivalent of approximately $897 for every person living in the US and 1.9 percent of US Gross Domestic Product, the NHTSA says, and based on the 32,999 fatalities, 3.9 million non-fatal injuries, and 24 million damaged vehicles that took place within the coverage year, the Insurance Information Institute (I.I.I.) notes.

“Included in these economic costs are lost productivity, medical costs, legal and court costs, emergency service costs (EMS), insurance administration costs, congestion costs, property damage and workplace losses,” writes the I.I.I., adding that when you “add in the $594 billion societal cost of crashes, such as harm from the loss of life and pain and decreased quality of life due to injuries, the total impact of crashes is $877 billion.”

Here’s how the numbers break down by specific area and percentage:

  • Property damage 28 percent
  • Market productivity 25 percent
  • Medical 13 percent
  • Congestion 10 percent
  • Insurance 9 percent
  • HH Prod 8 percent
  • Legal 5 percent
  • Workplace 2 percent
  • EMS almost 0 percent

The NHTSA explained that for lost productivity, the high costs “are a function of the level of disability that has been documented for crashes involving injury and death.” For property damage, costs were “mainly a function of the very high incidence of minor crashes in which injury does not occur or is negligible.”

As for congestion, which accounts for some $28 billion, or 10 percent of total economic costs, the description includes travel delay, added fuel consumption, and pollution impacts caused by congestion at the crash site.


What should the average insurance customer take from these findings?

A. The problem is getting worse, not better, and by a significant margin. Twenty percent is a big leap. Coincidentally, texting while driving became a bigger issue from the 2000 findings to the 2010. The report doesn’t prove outright that such dangerous activity accounts for the increase, but separate reports have confirmed the threat. Bottom line: keep those phones in your pocket while driving.

B. When you have an accident, you affect others, and on a more personal note, you affect multiple areas of your own life. An accident that you cause may lead to costly vehicle repairs — both yours and other not-at-fault parties — as well as a loss in productivity, a loss in income, and possibly even medical and legal expenses. One mistake, in other words, has many more repercussions beyond simply raising your auto insurance premium.

C. An ounce of prevention goes a very long way. The safer that you are when hitting the roadways, the more manageable your life will become. Therefore, pay attention to what you’re doing behind the wheel. Beyond that, try to anticipate the decisions of the other driver. Even when an accident is the other person’s fault, it can end up costing you. Say you have your old, reliable used car paid off and someone crosses over into your lane and totals it. Putting aside any lost wages that you incur from dealing with the insurance matters, you’ve got to find a replacement car — new or used — and that generally comes with a car payment that you didn’t have to worry about beforehand. Defensive driving pays off. Use it.


In Summary

For all the improvements that we’ve made as a society when it comes to cars, safety features, and best practices for safe driving, we’re still making the problem worse. You can’t be too cautious while you’re behind the wheel, and you can’t afford to simply mind your own business. You’ve also got to watch out for the other guy.

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