Question: I recently acquired round-trip business-class tickets for Europe using reward points — more than 200,000 points — with credit card awards. Will travel insurance reimburse me in dollars if I cancel my trip, and how will the insurance company determine the value of my tickets?
Answer: Confucius said, "Life is really simple, but we insist on making it complicated." Right on, C. This has more answers than a hydra has heads.
If you are buying a frequent-flier ticket using points you've accumulated through an airline rewards program and you must cancel your flight, you generally may do so. In this case, the ticket is on Delta, which says you may cancel up to three days in advance.
If you cancel, you will pay a fee to redeposit those points, said Brian Kelly, whose website, ThePointsGuy.com, is dedicated to helping travel loyalty program customers make the most of their points. You can buy insurance, Kelly said, that may cover that redeposit fee, which can run $150.
Delta offers ticket insurance through Allianz Global Assistance that includes, Delta's website says, "trip cancellation/ interruption coverage that reimburses prepaid, unused, non-refundable travel expenses should your trip be canceled or interrupted due to any covered reason."
As always, when you are dealing with insurance, you must check the fine print, and although your eyes may glaze over when you read this, they may widen in surprise when you discover what isn't covered. Each policy is different, which is why you must read each policy each time. It is, as we say in the news business, DBI — dull but important.
If your claim is OKd, you may get back the redeposit fee.
Now onto a slightly different scenario: If you're buying a ticket using convertible points — that is points you accumulated from, say, American Express that allow you to convert those AmEx points to frequent-flier points — and you must cancel your trip, you probably will get credit for the points, not cash.
Even if you buy insurance from one of the many travel providers apart from the airline, you most likely will not get cash back on an awards point ticket, said Megan Singh, marketing manager for SquareMouth, a travel insurance comparison website, which factors in numerous variables and offers quotes from different companies.
That's because there's no dollar amount associated with those points. What if you know that the ticket would have cost $2,000? "You can assume it may have cost $2,000, [but] there's no way to prove it," she said.
Other loyalty credit card companies have a third party that books your ticket, and you would need to work through the company's agency to square away your refund, which, again, probably would be in the form of a credit and not cash.
Next week: Consumers love to hate airline awards programs. Can this marriage be saved?