Should I Purchase Trip Insurance To Cover An Award Redeposit Fee?

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TPG reader Mary had a question about travel insurance and what it covers when it comes to award tickets:

“Hi TPG. I will be booking a trip to Paris with my American Airlines AAdvantage miles (thanks to you!). If I purchase trip insurance, will my miles be credited for free if we need to cancel? If I don’t purchase the insurance, and we cancel, how much do I have to pay to get the miles put back into my account?”

To answer the easier question first, American will charge you $150 per passenger to redeposit miles. This fee is waived for Executive Platinums using miles from their own account. However, since all three tickets are coming from Mary’s account, it’s only $150 for the first ticket and $25 each for the other two, for a total of $200.

American offers trip insurance through Allianz.
American offers trip insurance through Allianz.

As I’ve written about in posts covering travel insurance, what is covered totally depends on the policy you purchase. Many airlines, including American, offer trip insurance directly. American does so through its partner, Allianz. It offers a basic AAdvantage Trip Protector policy for a flat $13 per person fee that covers the fees the airline would charge you for trip cancellation ($200), trip interruption (up to $500), travel delay and baggage delay. All award redeposit fees are also covered. So for a week-long trip, you’d be paying $273 for all three passengers.

You could also purchase the Trip Protector Select, which includes further coverage for things like emergency medical and dental care, emergency medical travel, and travel and baggage delay for $24 per person per day. So for a week-long trip, you’d be paying $504.

However, the terms of both policies cover emergencies like medical issues (excluding preexisting conditions), but not simply changing your personal plans.

That’s pretty much going to be the case with basic plans across the board, even if you go through a site like InsureMyTrip which is kind of like an insurance marketplace with 21 member companies and choose the best policy for your needs.

I plugged in Mary’s dates and some estimates into InsureMyTrip and estimated the value of her week-long trip to Paris at about $3,000 – which doesn’t include airline tickets, but takes into account about $200 in taxes on each award ticket. Basic packages – including an Allianz one with the same coverage as American’s AAdvantage Trip Protector Select – came in at around the $120 mark for all three of you for the week, so if you do buy this insurance, I’d go through InsureMyTrip.

Although after looking through about a dozen of the policies I found through InsureMyTrip, I could not find one that included trip insurance or cancellation coverage for any reason, several did have very broad clauses as to reasons for cancellation/interruption that were eligible for coverage including damage to one’s home, divorce, being laid off, getting pregnant, or even jury duty. One of these was the Allianz Deluxe package for $225 total.

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The plan includes trip cancellation and interruption insurance for up to $1,000 and $1,500 respectively, each, $2,500 for lost baggage, and up to $600 for delayed baggage, as well as up to $1,500 for travel delay and $50,000 for medical care plus $1 million for emergency medical evacuation. It also includes rental car insurance and accidental death insurance up to $50,000.

So without knowing the specific reasons Mary might need to change her plans, and assuming she is not an Executive Platinum, here’s what I would do. If you are only booking your tickets speculatively now and are interested in covering the award redeposit fee and no other cost, I might just chance it and not purchase any insurance because you’ll be paying $200 to redeposit your miles, the cheap insurance policies won’t cover changes to personal plans, and you’ll still be stuck paying anyway.

However, if you intend to take your trip and would only cancel for a covered emergency or crisis that comes up, then you can definitely find a plan that will cover you, and that will also cover any contingencies that might come up on the road like medical emergencies, car accidents, and more. Plus, if you buy a plan like the Allianz Deluxe one above, you will also be insuring otherr portions of your trip, including hotel, tours, excursions, train tickets, etc., as well as the award redeposit fee.

The one thing to look out for is the specific terms of trip cancellation and trip interruption coverage of the policy that you purchase to make sure that the reasons you might have to cancel are eligible for coverage. If it’s just that you think you’ll want to take your trip at another date, then you might be out of luck, but if you intend to take your trip and would only cancel for a covered emergency or crisis that comes up, then you can definitely find a plan that will cover you, and that will also cover any contingencies that might come up.

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