Travel Insurance for Frequent Flyer Award Tickets

TravelSort reader Graham writes “I bet a significant percentage of your readership are mature travelers, with hard earned miles. Miles we dont want to lose as a result of an unfortunate, family or health problem necessitating cancellation of our award booking. Any ideas on how…to handle travel insurance needs would be appreciated. No one wants to have to forfeit miles.”

So true–the joy of redeeming frequent flyer miles for an incredible trip can be severely marred should the unexpected occur, especially in the middle of a trip, which may even necessitate forfeiting return award travel and buying a paid ticket home (more on that later). Travel insurance is often a hotly debated topic, although most of the discussion tends to be around insurance for paid tickets, not frequent flyer award tickets. I'll organize this as a FAQ.

 

Travel Insurance for Frequent Flyer Award Tickets FAQ

Can I Insure My Frequent Flyer Miles and Points Using the Retail Cost of the Ticket?

Here's the single biggest issue about award tickets: the miles or points you paid for your award are NOT insurable, so even if you redeem your miles or points for a first class flight worth $20,000, you don't get to insure your trip for that amount–the actual cash paid amount after all is $0 (excluding taxes, which are generally refunded if you end up cancelling your award travel prior to departure).

 

What About the Award Redeposit Fee?

The award redeposit fee is insurable. For example, United charges $150 to non-elites to cancel and redeposit your miles ($125 for Premier Silver, $100 for Premier Gold, no fee for Global Services, Premier 1K, Premier Platinum). Likewise, with American Airlines, there's a $150 fee per account for the first award ticket you redeposit or reinstate. Any additional award tickets redeposited or reinstated to the same account at the same time is charged an additional $25. You can purchase travel insurance that covers the award redeposit fee.

 

What If I Have an Emergency During My Trip?

For awards with United, American, and other airlines that offer one-way awards, you'd be able to either change your return flight for a fee, or cancel and redeposit for a fee, as noted above.

Here's the problem: some airlines, such as US Airways and Delta, don't offer one-way awards, so if an emergency arises that causes you to not be able to use your return tickets, and you instead have to purchase new tickets (say because there's no award space to return when you need to), then you won't be able to get compensation for the return tickets because you've already partially used the award with the outbound flight.

Trip interruption insurance can cover the cost of an economy one-way fare home; many travel insurance policies already include this benefit.


Will My Credit Card Trip Insurance Cover Frequent Flyer Award Miles If I Earned Them With the Card?

No, unfortunately not. You should definitely consider using your credit card to get trip insurance on paid tickets, however. For example, the Sapphire Preferred and the Ink Bold (presumably the Ink Plus as well) offer up to $5000 Trip Cancellation / Trip Interruption Insurance for the fare of a Common Carrier (land, air or water tickets, excluding taxi) if you charged the trip cost on your card. Note that there are the usual exclusions for pre-existing medical conditions, traveling against the advice of a physician, injuries arising from participating in sports events, racing or speed contests, uncertified scuba diving, traveling during the third trimester of pregnancy, etc. The nice thing about using the Sapphire Preferred is that you also get 2X points and a 7% annual dividend (so 2.14X) for all travel, including airfare, train tickets, boat tickets, hotels, etc., so that's another good reason to book using the card, if you're not buying supplemental travel insurance. 

Cards such as the Citi AAdvantage AMEX, United MileagePlus Explorer, and others offer a smaller Trip Cancellation / Trip Interruption benefit of $1500.


Takeaway Points

  • Travel insurance policies cover non-refundable cash expenses – NOT frequent flyer miles.
  • Travel emergencies are yet another reason to be wary of US Airways and Delta miles, since you'll forfeit your miles if you can't manage to change your return flights to a suitable date. This is a real possibility if you're traveling during peak season and trying to get award flights home immediately. Carriers that allow one-way awards, such as United and American, allow you to cancel and redeposit miles for your return flight for a fee (or free if top-tier elite).
  • If you're a non-elite cancelling an award trip and want to avoid the redeposit fee, you could change the departure date to many months out (within a year of the date of issue) and monitor for a schedule change, since that will enable you to cancel and redeposit without a fee.
  • If you do pay for a ticket instead of using miles and points, put it on your credit card that offers the most generous travel insurance policy. For example, the Sapphire Preferredand Ink Boldprovide up to $5000 in travel cancellation and travel interruption insurance for paid (not award) tickets.

Have other questions about travel insurance for award tickets or paid tickets or personal experience or horror stories? Let me know in the comments!

Related Posts

Trip Delay and Trip Interruption Insurance: Which Credit Cards

Travel Checklist: What to Do and Pack Before Your Trip

Comparing Airline Award Fees And How to Avoid Them

Tips for Making Sure Your Luggage Doesn't Get Lost 

 

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