Replacement Staff Costs (Alternative Employee Expenses)
Replacement staff costs are the travel and accommodation expenses, covered under business travel accident insurance, for a substitute whom the employer sends to take over the business task of a traveller who is incapacitated by death, accident or serious illness – including the cost of the recovered person later resuming the assignment.
Function
If a travelling employee is incapacitated abroad by accident, serious illness or death, the business purpose of the trip – contract negotiation, installation, audit, project acceptance – remains unfinished. The replacement staff costs module reimburses the employer for the expenses of getting a suitable substitute to the place of assignment: flight or rail, transfers, accommodation and meals for the duration of the journey and, in many wordings, the substitute’s return trip. Under the ERV wording, the outbound and return journey of a substitute employee is paid on the basis of the originally booked class, business class at most. The AIG wording adds the cost of the originally assigned person resuming the assignment after recovery.
Distinctions
Replacement staff costs are an expense cover in favour of the employer, not a benefit to the insured person. They must be distinguished from the repatriation of the sick traveller, from cancellation and curtailment costs and from key person insurance, which covers loss of profit on the permanent loss of a key person rather than the travel costs of a stand-in. Not reimbursed, as a rule, are the substitute’s salary costs, lost profit from the missed business and substitute travel where the absence is not due to an insured medical event. Typical limits are in the five-figure range per event.
Practical Note
The module is relevant for companies with time-critical deployments – service technicians, project teams, contract signings. It should be checked whether the death of a close relative at home also counts as a trigger and whether the substitute may travel from abroad.