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Will travel insurance cover a trip that was booked with reward points?

Nov. 24, 2022
5 mins
Woman planning to travel with luggage

If you’re one of the many Canadians who stockpiled their travel rewards during the pandemic, you may be planning to use them for your upcoming holiday trips. Using loyalty program points from airlines, credit cards, and hotel chains is a good way to save some money this holiday season.

But what happens if something goes wrong during your trip – if you fall ill? Or if there are flight cancellations or interruptions? With travel insurance, you usually get your cash back when these kinds of emergencies occur. But will travel insurance cover you if you paid for your trip with points?

Travel insurance may not give you your points back

Finding a travel insurance policy to reimburse your points may be difficult, says Will McAleer, executive director of the Travel Health Insurance Association of Canada.

The issue with travel rewards is that they aren’t money, and travel insurance tends to reimburse its policy owners in cash for missed trips.

McAleer says that travel insurance policies bought via the airline whose loyalty points you’re using may be more amenable to giving you back your points. That’s on a case-by-case basis, however, so read carefully.

Stand-alone travel insurance policies — that is, ones that are not partnered with the airline carrier — usually won’t reimburse you with cash in lieu of points, and they don’t have the authority to get them back for you from your loyalty provider. But McAleer assures that these policies will almost always reimburse you for taxes, fees, and anything else not covered by the points.

Look into your loyalty rewards program before you book

Prior to departure, it’s wise to get in touch with your travel loyalty program and get clarity on its points reimbursement policy.

“You want to make sure that the policy will be able to transfer those points back and that it will cover any fees associated with that,” says McAleer. “If they’re not going to do that, there’s a certain amount of risk you need to take.”

The good news is that airline loyalty programs will often refund your points for flight cancellations. However, it gets a bit more complicated with reward points via hotels or credit cards, as well as anything related to flight interruptions, such as delayed flights and cancelled connections.

McAleer recommends reading your loyalty program’s conditions very carefully. You can then get a better understanding of what kind of protection your points have.

“If you have a legitimate reason, and your loyalty provider won’t allow the points to be put back into your account, then that’s a consideration for the loyalty program itself,” McAleer says.

While travel insurance is a must-have, it may not always be the best protection for your reward points. Before you depart, be sure to compare travel insurance quotes to make sure you have the right coverage for the lowest price. And ask the insurance provider or broker about its points reimbursement policy.

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Sabina Wex

Sabina Wex is a writer and podcast producer in Toronto.

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