REVENUE NECESSARY TO PAY FOR ACCIDENT LOSSES
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 $1,250,00 of 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 (as shown in the chart below).
REVENUE REQUIRED TO COVER LOSSES
|
YEARLY ACCIDENT COSTS |
|
VS. PROFIT MARGIN |
|
|
||
|---|---|---|---|---|---|---|
|
1% |
2% |
3% |
|
4% |
5% |
|
|
$1,000 |
$100,000 |
$50,000 |
$33,000 |
|
$25,000 |
$20,000 |
|
5,000 |
500,000 |
250,000 |
167,000 |
|
125,000 |
100,000 |
|
10,000 |
1,000,000 |
500,000 |
333,000 |
|
250,000 |
200,000 |
|
25,000 |
2,500,000 |
1,250,000 |
833,000 |
|
625,000 |
500,000 |
|
50,000 |
5,000,000 |
2,500,000 |
1,667,000 |
|
1,250,000 |
1,000,000 |
|
100,000 |
10,000,000 |
5,000,000 |
3,333,000 |
|
2,500,000 |
2,000,000 |
|
150,000 |
15,000,000 |
7,500,000 |
5,000,000 |
|
3,750,000 |
3,000,000 |
|
200,000 |
20,000,000 |
10,000,000 |
6,666,000 |
|
5,000,000 |
4,000,000 |
Accident costs consist of any /or all of the following:
. • Vehicle Damage
. • Loss of Revenue
. • Administrative Costs
. • Police Reports
. • Cargo Damage
. • Possible Effects on Cost of Insurance
. • Possible Effect on Cost of Workmen’s Compensation Insurance
. • Towing
. • Storage of Damaged Vehicle
. • Damage to Customer Relationships
. • Legal Fees
. • Customer’s Loss of Revenue Directly Attributable to Accident