What is the difference between insured and uninsured costs?
To determine the difference between insured and uninsured costs, we have to understand both costs one-by-one. In this article I will explain each cost one by one so that you could understand them easily.
so let's get into it.
What are insured costs?
Insured costs are the expenses covered by insurance policies. These expenses may include worker's compensation insurance, liability insurance or property insurance. Insurance company is responsible of paying all the expense linked with accident such as medical expense, sick pays, recruitment costs, legal fees, and damage to property or equipment etc.
There are just 20% of costs related to accident which are insured. These costs include:
- Medical expenses:
Insurance companies are liable of paying medical cost of the employee who injured due to the accident. Medical expenses may include the expense of first aid, ambulance ride, medicines, doctor visit, surgeries and hospital stay.
- Compensation payments:
Compensation is the amount that injured person claims if he got disabled as a result of injury. It's legal right of the injured person because he was working for the company. Company is responsible of paying compensation to the injured employee.
What are Uninsured Costs?
Uninsured costs generally refers to the costs that are directly paid by the company and Insurance companies are not responsible of paying these costs. Uninsured costs may include expenses such as reputation damage, lost business opportunities, and lost production time etc.
Almost 80% of the cost linked with accident is uninsured.
20 Uninsured costs are:
- Time lost from work by injured
- Loss in earning power
- Economic loss to injured’s family
- Lost time by fellow workmen
- Loss of efficiency
- Lost time by supervision
- Cost of hiring new man
- Damage to tools and equipment
- Time damaged equipment is out of service
- Spoiled work
- Loss of production for remainder of day
- Spoilage: fire, water, chemical, explosives, etc.
- Failure to fill orders
- Overhead cost (while work was disrupted)
- Loss of productivity
- Loss of employee morale
- Loss of reputation
- Loss of customers because of bad reputation.
- Contract delays
- Overtime
[Declaimer/Note: You can use this knowledge of insured and uninsured costs in your NEBOSH IGC exam, but make sure that you apply this knowledge in your scenario. Do not just copy and paste in your exam.]
Conclusion:
Insured and uninsured costs depends upon various factors such as nature of accident, insurance policies etc. If the accident is occured because victims own negligence then insurance companies don't pay even a single scent.
Hope this blog make you understand the terms Insured and Uninsured costs and their differences.
Thanks for visiting HSE-WALA.
Regards: Rehan Waseem.
