Why points and miles are the best insurance policy

Mar 12, 2020

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Editor’s note: This post has been updated with information about the COVID-19 virus (novel coronavirus). It was originally published on Oct. 26, 2018.

The rapid spread of the novel coronavirus, and the flight cancellations and travel restrictions that have accompanied it, have people the world over scrambling to cancel their trips or find alternate routes home. If you’re booking flights or hotels on a travel rewards credit card that offers a bonus for travel purchases like the Chase Sapphire Reserve, you’ll likely have certain kinds of built-in protection if things go wrong. These policies vary by card and by issuer, but generally speaking, they’re limited to flight delay and trip cancellation coverage, and even then they only apply to specified eligible reasons. “Weather and mechanical delays” doesn’t even begin to cover the range of curveballs life can throw at you, and many people have found out the hard way that most major travel insurance providers are not treating coronavirus related cancellations as covered events.

Related: Visit this page for TPG’s full coverage of the coronavirus outbreak

Of course, when things inevitably get thrown off plan, having a cash buffer is the easiest way to get them back on track. While a main point of travel rewards is to take free (or nearly free) trips with your friends or family members, I’ve found another key benefit to this world. Over the years, I’ve experienced firsthand how points and miles, especially flexible transferable points like Chase Ultimate Rewards and American Express Membership Rewards, can act as a great “insurance” plan when I need them most. Here are a few personal stories from my own travels where my “extra” points really saved the day, along with some general tips for you to do the same.

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In This Post

24 hours to beat the quarantine

For the last two years I’ve enjoyed living in Shanghai, though the coronavirus has certainly complicated things and made it more difficult to travel. Due to some health issues in my family I fly back to the U.S. pretty regularly, about five or six times a year. I had one such trip scheduled for the beginning of March, and I was beyond ecstatic to fly in ANA’s brand new first class with a quick overnight layover at Tokyo Haneda (HND).

Related: How miles gave me the flexibility to fly home from China in a squeeze

Booking this trip in the first place required a bit of creativity, as I had to book all five legs separately (three flights, from Shanghai to Tokyo to New York to D.C., and hotels for the long layovers in Tokyo and New York). Five days before I was supposed to fly, I learned that Japan was planning to enact two new restrictions in order to stop the spread of the virus. The first was that all flights from China and South Korea would be required to land at Tokyo Narita (NRT) or Osaka (KIX) airports, effectively cancelling my flight to Haneda (HND). The second was that all travelers arriving from those countries would be forced into a mandatory 14-day government quarantine.

I found out about these changes on Saturday afternoon, and they were set to go into effect Monday morning. This meant I had less than 24 hours to cancel my entire itinerary and find a faster way to get home. Thankfully I had enough Amex points lying around that I was able to book a new ANA first-class award ticket to Washington DC while I was waiting on hold with Avianca to cancel my original ticket. Avianca customer service is spotty even in the best of times, and I spent well over four hours on hold getting transferred between different departments, but I was much more relaxed having already secured my new flight.

Getting “walked” from a dorm

My girlfriend and I spent most of college chasing each other around the world, with one of us studying abroad for a summer or semester and the other coming out to visit. When she got accepted to a five-month program in Sydney, it was my turn to start booking flights. I got incredibly lucky right off the bat: American Airlines had a major fare sale at exactly the same time I had a $500 bump voucher burning a hole in my pocket. I was able to book a five-day trip from Washington-Reagan (DCA) to Sydney (SYD) for about $250 out of pocket.

In order to stay ahead of the jetlag, we spent our first day on the move. After going directly from the airport to Bondi beach, we did the entire 6-kilometer walk to Coogee and thus planned to sleep in the next day. However, we were woken up at about 8 a.m. by a harsh knock on the door of her dorm room. An employee of the dorm calmly but sternly reminded her that they have a zero-tolerance guest policy. Never mind the fact that she had a single within the apartment and had cleared my visit with her roommates. I had to leave. The guy even smugly suggested that I decamp to the hotel across the street for the night. No thanks.

Even if it was an accident, the Park Hyatt Sydney was a real treat
Even if it was an accident, the Park Hyatt Sydney was a real treat. (Photo courtesy of Park Hyatt Sydney.)

Unwilling to let this derail my trip, I grabbed my suitcase and we went to brunch to make a game plan. Sydney is a modern, English-speaking metropolis, but this was one of my first international trips, and there was no one around I could ask for help. All I had at my disposal was a pretty solid stash of Chase Ultimate Rewards points and an uncapped IHG reward-night certificate. In about 15 minutes I transferred Ultimate Rewards points to Hyatt and booked us one night each at the Park Hyatt Sydney and another at the InterContinental Sydney.

We had an amazing time, obviously, and my girlfriend even got to play tourist in the city she’d been living in for three months. We now have a running joke: When life hands you lemons, check into the Park Hyatt. Guaranteed fix, and it didn’t cost me a penny.

Related: Hotel credit cards that come with an annual free night

Family comes first

One of my close friends from home grew up estranged from her father. She had a pretty rough childhood but always tried to make the best of it. We drifted apart a bit once we left for college, but one day I got a call from her saying her dad had turned up in a VA hospital in bad shape. He had days, maybe just hours left, and she desperately wanted one last chance to try to patch things up. She knew nothing about my points hobby but was asking if I had any idea how she could get from Washington, D.C. to Columbus in the shortest amount of time humanly possible.

Without missing a beat, I whipped out my computer and found her a Southwest flight that left in just two hours. I transferred points instantly from my Chase Sapphire Preferred Card (this was before the Reserve had launched), and she ended up getting a few whole days to spend with her dad. The flight was pretty cheap, no more than ~$200, but even today I regard this as my best redemption ever. Vacations and new experiences are an incredible perk to this hobby, but family comes first, and I was so fortunate to be able to help in this situation.

Related: TPG readers reveal their best last-minute points and miles award redemptions

Always have a Plan B

Stock traders often talk about hedging their bets, using fancy complex tools like options and derivatives to limit their losses if the market goes haywire. While it’s almost impossible to lose when you’re getting free flights, it never hurts to have a backup plan to protect yourself. This is especially true in the following circumstances:

  1. You need to travel on very specific dates and don’t have any flexibility.
  2. You’re aiming for a hard-to-get award like Singapore Suites or Qantas A380 first class.

After I used up my 5/24 slots with Chase, the next miles I started seriously collecting were (pre-merger) SPG points and Alaska miles. I had my sights set on Cathay Pacific first class for a trip to Thailand, but I needed to leave the U.S. on one or two specific days, and I couldn’t find a single Cathay award seat that worked for me. So I acted like a trader and booked a hedge: For 130,000 United miles I locked in an ANA first-class flight from Chicago-O’Hare (ORD) to Tokyo-Narita (NRT) with a connecting flight in Thai first class to Bangkok (BKK). This backup plan would get me where I needed to be (and quite comfortably at that) should I need to actually use it.

With only six seats in the first-class cabin, Cathay Pacific awards can be tough to find. (Photo by Samantha Rosen/The Points Guy.)

That didn’t happen, since the award I wanted ended up showing up a week or two before my trip. I paid $100 (as a United Premier Silver member) to cancel my original booking and locked in my ideal routing. If my $11,000+ Cathay Pacific ticket cost me $125 instead of just $25 in taxes, that’s still a pretty good deal in my book. And more importantly, if that award hadn’t opened up, I would’ve still made it to Thailand on time and in style.

This is a strategy I continue to apply with my award bookings whenever possible. For example, Korean Air allows 30-day holds on award tickets, even if you don’t have the miles in your account yet. Before flying the carrier’s 747-8, I had two first-class awards on hold for two different trips while I figured out which one I actually wanted to take.

The one notable exception here is that I wouldn’t advocate transferring extra points from a flexible currency like Ultimate Rewards or Membership Rewards to lock in a backup plan. Since those transfers are final, you should only “hedge” your award options if you already have points with the airline you need.

Related: The 9 best credit cards for flying United

Can’t handle the heat

The week I spent in Okinawa was incredibly enjoyable except for two pretty major problems. The first (entirely my fault) was that we forgot to rent a car. Naha is a lovely city, but if you’re going to Okinawa to scuba dive, like my girlfriend was, you’ll be making plenty of trips to the north side of the island. And with no public transit outside of Naha and no car of our own, we were easily spending $60-90 each way on cab fares. And then there was the other thing …

I still have a lot of trouble converting between Fahrenheit and Celsius, so when our Airbnb in Okinawa was sweltering hot every day, I didn’t read too much into it. I blamed it on our tropical location in the middle of July and simply turned the air conditioning in our room up as high as it would go. But by the second or third day it was getting pretty unbearable — we even stopped showering in the morning to get out of the house faster.

We finally found the thermostat about halfway through our stay, and I will never forget the number on the display: 43. That’s right; our host had it set to 43 degrees Celsius, or about 110 degrees Fahrenheit. Her English wasn’t great, and even with the help of Google Translate we couldn’t convince her to turn it down to a less sweltering temperature. Airbnb customer support also wasn’t able to help, but we knew we had to get out of there.

The Ritz-Carlton, Okinawa
The Ritz-Carlton, Okinawa. Another one of those “happy accidents”. (Photo courtesy of the Ritz-Carton Okinawa.)

As with my experience in Sydney, I wanted to move on as quickly as possible without ruining our trip, so I quickly pulled up my SPG app and looked for hotels on the island. As luck would have it, there was one right near the next day’s dive site: the absolutely stunning Ritz-Carlton Okinawa. I booked us two nights and got right back to enjoying some of the clearest water I’ve ever seen.

Strategies for you to use

Of course, these stories are all specific to my experiences, but there are a few key takeaways that can help ensure you have this “insurance” policy for your next trip:

  • Transferable points are key: We discuss transferable points here at TPG all the time, and there’s a reason: They allow you incredible flexibility when things go awry. What if I didn’t have Chase points in Sydney? I’m sure I could’ve found an inexpensive hostel miles from my girlfriend’s school, but that would’ve meant money out of my pocket and time away from each other. This type of rewards currency allows you to wait until you’re ready to pull the trigger, and since many Chase and Amex transfers are instantaneous, you hopefully won’t be left waiting.
  • Elite status can help: Another popular topic on this site is elite status. This isn’t just about the first-class upgrades or free breakfasts; it can also involve benefits that are decidedly less glamorous. My lowly United Premier Silver status saved me $25 when I cancelled my award flight on ANA and Thai, but other tiers could’ve provided even greater savings.
  • Last-minute doesn’t have to be expensive: Both of these items (transferable points and elite status) can be particularly valuable when you need to book a last-minute award ticket. Many airlines charge close-in booking fees when you redeem miles just a couple of days or weeks before departure. These are often discounted or waived for travelers with elite status, but transferable points can help even the non-status flyer by giving you a choice of programs to book with.
  • Find the sweet spot of your account balances: Most of us here at TPG subscribe to an “earn and burn” philosophy when it comes to points and miles to guard against sudden devaluations. However, the only way points and miles can act as an insurance policy is if you actually have them. Try to find the account levels that give you a little cushion without being over-leveraged with one currency. Once again, transferable points are critical in this endeavor (notice a pattern?).

Bottom line

In the grand scheme of things, most of my stories were minor hiccups that ended up being great learning experiences no matter how stressful they may have felt in the moment. However, this same idea of using travel rewards to minimize your costs for last-minute trips applies to more serious circumstances as well, like the current coronavirus outbreak and travel restrictions and cancellations that are rapidly changing.

If there’s an accident or unexpected death or illness in your family, points and miles can help you get where you need to be as fast as possible. Even if your credit card offers a travel insurance policy, there’s always room for “self insuring” with your own travel reward balances to protect against the unexpected.

Featured photo by Ethan Steinberg/The Points Guy.

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Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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