Insuring Frequent Flyer Tickets: A Comprehensive Guide

If you're a frequent flyer, it's important to understand how travel insurance works when it comes to insuring your flight tickets. While travel insurance can provide valuable coverage for unexpected events, there are some complexities when it comes to frequent flyer miles or reward points. The face value of these points is typically not covered by travel insurance, but that doesn't mean you can't protect your investment. Certain non-refundable fees and taxes associated with redeeming miles and award tickets can be insured. Additionally, if you need to cancel your trip for a covered reason, you may be reimbursed for redeposit fees and any partial payments made out of pocket. Understanding the specific rules and regulations of your frequent flyer program and carefully reviewing your travel insurance plan are crucial steps to ensure adequate coverage.

Insuring non-refundable fees and taxes

When it comes to insuring non-refundable fees and taxes on frequent flyer tickets, it's important to understand what travel insurance can and cannot cover. While you should still purchase travel insurance, you cannot insure the retail value of the airline ticket, i.e., the price you would normally pay out of pocket. This is because, from the insurance company's perspective, you can only insure the prepaid, non-refundable trip cost.

However, there are certain items that you can insure. If you have paid any non-refundable fees and taxes associated with redeeming miles and obtaining award tickets, these can be covered by your travel insurance. This includes a prepaid, non-refundable baggage fee, which is a cost that airlines typically charge. Additionally, if you need to cancel your trip for a covered reason, you can be reimbursed for the cost of redepositing the miles or any rebooking fees, often referred to as administrative fees. Most frequent flyer programs have a redeposit fee to return the miles to your account, and these fees can range from $100 to $150. Nevertheless, it's important to note that if you cancel your trip for any reason without a specified cause, no travel insurance will reimburse you for the frequent flyer miles redeposit fees.

It's also worth mentioning that trip interruption coverage can be beneficial if you need to return home early due to an emergency. However, if you are only paying taxes and fees on a free airline ticket, your trip interruption coverage will likely be minimal. In such cases, purchasing additional travel health insurance may be advisable if you require higher coverage.

Furthermore, it is important to carefully review your travel insurance plan to understand what is covered and what is excluded, especially when using frequent flyer miles. While some plans may provide trip interruption coverage up to 100% of the trip cost, others may offer up to 150%. Therefore, understanding the specifics of your plan is crucial to ensure you have adequate coverage.

Trip interruption coverage

Some plans provide trip interruption coverage up to 100% of the trip cost, while others provide up to 150%. For example, if you paid $3,000 for a cruise and $120 for fees and taxes, your trip cost would be $3,120. You could be covered for trip interruption up to $3,120 or $4,680, depending on the plan. However, if your total trip cost is low, such as $120 or $180, you will not be able to buy an urgent airline ticket home if you need to return abruptly.

It is important to note that frequent flyer points cannot be reimbursed under trip interruption coverage. This coverage only applies to prepaid, non-refundable trip costs. If you need to cancel your trip for a covered reason, you may be reimbursed for any fees incurred to redeposit your points into your account. Additionally, if you partially paid for your flight using points and paid the remaining balance out of pocket, you may be reimbursed for the portion you paid yourself, provided the reason for cancellation is covered under your plan.

Redeeming frequent flyer points

Understanding the Value of Points

Frequent flyer points are often marketed as having a certain monetary value, but this value is not always accurate or consistent. The value of a point can vary depending on the airline, the specific frequent flyer program, and how the points are redeemed. For example, the number of points required for a reward flight may fluctuate based on demand, and different airlines may offer different redemption rates. Therefore, it's important to research the value of your points before redeeming them to ensure you're getting the most out of them.

Booking Reward Flights

One of the most common ways to redeem frequent flyer points is to book reward flights. Most airlines allow you to use your points to cover the entire cost of a flight, including taxes and fees. However, reward flights often have limited availability, and you may need to book well in advance to secure your desired travel dates. Additionally, some airlines may charge redemption fees or other surcharges when you book a reward flight.

Upgrades and Other Perks

Frequent flyer points can also be used for upgrades to a higher class of service, such as business or first class. This can be a great way to enhance your travel experience without paying the full price for a premium ticket. In addition to flight rewards, many airlines offer other perks that can be redeemed with points, such as lounge access, priority boarding, or discounts on car rentals or hotel stays.

Trip Cancellation and Interruption Coverage

When booking a flight with frequent flyer points, it's important to consider the possibility of trip cancellations or interruptions. While travel insurance can provide coverage in certain situations, it typically does not cover the face value of frequent flyer points or miles. However, some insurance plans may reimburse you for any fees incurred when redepositing your points back into your account after a covered cancellation.

Points Plus Pay Options

Some airlines offer "Points Plus Pay" programs, which allow you to redeem a certain number of points while paying the remainder of the booking cost with a credit or debit card. This option provides flexibility if you don't have enough points for a full reward flight. However, it's important to note that the minimum number of points required for these programs may vary, and you may still be responsible for taxes and fees.

In summary, redeeming frequent flyer points can offer significant benefits, but it's important to understand the terms and conditions of your specific frequent flyer program. Be sure to review the rules and restrictions before booking to ensure you're getting the most value from your points.

Trip cancellation insurance

When purchasing trip cancellation insurance for a trip booked with frequent flyer points, it is essential to carefully review the insurance plan's terms and conditions. Not all travel insurance plans offer coverage for frequent flyer points. Some plans may only provide coverage for flights, excluding other travel arrangements such as lodging accommodations. Additionally, certain plans may have specific requirements for the trip cost to be eligible for coverage. For example, some plans may require the inclusion of non-refundable fees and taxes associated with redeeming frequent flyer points.

In the event of a trip cancellation, travellers may incur fees to redeposit their frequent flyer points back into their account. While some insurance plans may offer reimbursement for these redeposit fees, it is crucial to understand that this coverage is typically limited to specific circumstances, often referred to as "covered reasons." These covered reasons can vary among insurance providers, and it is the responsibility of the traveller to ensure they meet the criteria for reimbursement.

It is worth noting that the face value of frequent flyer points or miles is generally not covered by travel insurance. This means that if you cancel your trip, you cannot insure or receive reimbursement for the retail value of the airline ticket. However, if you have partially paid for your flight using frequent flyer points and paid the remaining balance out of pocket, you may be reimbursed for the portion you paid, provided that the reason for cancellation is covered under your plan.

Travel insurance options

When it comes to travel insurance options for frequent flyer tickets, it's important to understand what is and isn't covered. While travel insurance is still recommended, it's crucial to note that the face value of frequent flyer miles or reward points is typically not covered by travel insurance. In other words, you cannot insure the retail value of the airline ticket; instead, you can only insure the prepaid, non-refundable trip cost. This means that if you paid $0 for a frequent flyer miles award ticket, the ticket itself has no insurable cost because there was no trip cost.

However, there are certain associated costs that you can insure. These include non-refundable fees and taxes linked to redeeming miles and obtaining award tickets. Additionally, if you need to cancel your trip for a covered reason, you may be reimbursed for any fees incurred to redeposit your miles or points back into your account. This is known as trip cancellation coverage, and it's important to note that it doesn't include trip interruption or other coverages.

In some cases, you may have used frequent flyer miles to upgrade your ticket to a higher class. In such instances, you can only insure the actual cost that you paid out of pocket for the upgrade. It's important to keep all receipts or proof of payment to demonstrate how much you spent.

While travel insurance may not cover the frequent flyer miles themselves, it can still provide valuable coverage for other aspects of your trip. This includes emergency medical coverage, travel delay coverage, baggage loss coverage, and baggage delay coverage. These additional benefits can provide peace of mind and financial protection in the event of unforeseen circumstances during your travels.

Frequently asked questions