One of the most frequently asked travel insurance questions is about points travel. Let's say that you get to book that once-in-a-lifetime, around-the-world trip with the frequent flyer miles you've been saving up. Realizing the value of your trip, you decide to purchase travel insurance, with the understanding that you're buying trip cancellation and trip interruption benefits. Does your travel insurance cover the value of the points you used to book the travel?

 

As I've written about previously, the broad definition of "trip cancellation" is one of the common myths of travel insurance. If you read the fine print of a travel insurance policy, the trip cancellation benefit may only cover the actual value of your trip, and any associated fees that come with. This means your points may not hold the value that you assign to them - leaving you holding the bill at the end of the day. 

Does this mean that travel insurance is irrelevant when it comes to award travel? Not necessarily: by understanding all the definitions of your travel insurance policy, you can figure out what's covered, what's not, and how benefits apply to your award travel. Let's take a closer look how travel insurance applies directly to your award travel.

Travel insurance and award travel: an inconvenient combination

One of the main reasons why the trip cancellation benefit won't cover award travel is because there is no solid value to points and miles. Though arguments can be made to the value of points (such as the case of Citi issuing 1099 forms for sign-up bonuses), the ultimate value at redemption can significantly vary.

Travel insurance providers are only obligated to cover the value of the trip at the time of purchase. If your flight cost $500, then your trip cancellation policy would cover up to the cost of that trip. But if your flight cost 25,000 miles, there's no way to quantify that back into dollars. Subsequently, it is very difficult to prove the cost of a flight at the time of purchase. Without a paid receipt and matching confirmation or ticket number, there is no definitive way to prove the cost of travel.

Other fees that your trip cancellation policy may cover for award travel

That's not to say that your trip cancellation policy won't cover anything for your award travel. While there is no way to quantify the value of your points or miles redemption, ancillary fees may be recovered as part of your trip cancellation policy. This includes booking fees, taxes, and any redepositing fees that come with cancelling your trip. If you have to file a travel insurance claim for your trip cancellation, travel insurance providers suggest calculating all the prepaid, non-refundable costs that are associated with your travel. This includes lodging, tours, and other non-refundable costs.

What your travel insurance can cover on award travel

While your award travel may have some very touchy areas when it comes to trip cancellation, there are still many ways that travel insurance can help when you travel. Some of the key travel insurance benefits that may not be affected are:

• Trip delay: Depending on how long you are delayed, travel insurance may be able to cover certain costs that come with being stuck far away from home.
• Baggage Delay: It doesn't help to be in the middle of paradise with a coat on. If your bags get delayed coming off the plane, travel insurance may be able to cover some of your expenses.
• Emergency Medical: This might be the most important benefit of any travel insurance policy. Should you get injured or ill far away from home, travel insurance may be able to pay for hospital costs, and even emergency evacuation home.

Remember: every travel insurance policy is different, and offers different levels of coverage. Depending on the travel insurance policy you purchase, many situations may (or may not) be covered. Be sure to read the fine print on your travel insurance policy. And if a clause appears to be unclear, don't be afraid to ask for help from your travel insurance provider.