Frequent travelers often rely on air miles and points (or a combination of the two) to reduce their out-of-pocket expenses and make traveling more affordable. Travel rewards programs, such as airline loyalty programs, credit card points, and hotel rewards, allow you to book flights, accommodations, and other travel-related expenses at a reduced cost—or even for free.

However, while using miles and points can be a great way to travel, it’s important to understand how they factor into your trip costs as it can impact your travel protection.

Miles and Points – Mastering the Basics

Many travelers assume that redeeming miles or points offers the same protections as conventional payment method bookings, but this is not always true. Travel reward programs come in various forms, each offering distinct benefits based on how points or miles are earned and redeemed.

Types of Loyalty Programs

• Airline Loyalty Programs: Earn miles by flying with a specific airline or its partners. Redeemable for flights, upgrades, and other perks.
• Credit Card Reward Points: Earned through everyday spending, often transferrable to travel partners for flights, hotels, and more.
• Hotel Rewards Programs: Points earned from hotel stays, redeemable for free nights, upgrades, or exclusive perks.

Airline Miles vs. Credit Card Points

• Airline Miles: Tied to a specific airline’s frequent flyer program and subject to availability and blackout dates.
• Credit Card Points: Offer more flexibility than air miles, often transferrable to multiple travel partners, making them valuable for booking flights, hotels, or rental cars.

Hotel Rewards Programs

• Many hotel chains offer points-based rewards that can be used for free stays, suite upgrades, and even dining or resort experiences.
• Some programs allow you to transfer points to airline partners, providing greater flexibility for travelers.

Converting Points or Miles Between Programs

Oftentimes, someone with a surplus of points in one loyalty program (a hotel rewards program, say) will convert those points to another loyalty program that offers a different benefit, like the ability to book a flight.

While you can’t transfer points from one loyalty program to another, you can sometimes convert points. Loyalty and rewards programs typically have a set conversion rate. Doing your research beforehand will help to ensure you understand the exchange value and can maximize the benefits of your rewards without losing value in the conversion process.

Miles and Points In Trip Cost

When booking with miles or points, airlines, hotels, and travel protection providers treat these redemptions differently from conventional payment method purchases. Because no money is directly exchanged for the reward portion of your trip, travel protection providers typically assign a $0 value to the miles or points portion of your trip cost.

This can impact your travel protection as the value of redeemed points or miles cannot be reimbursed in case of trip cancellations, delays, or interruptions and therefore should not be included as part of your overall trip costs.

However, out-of-pocket expenses such as taxes, fees, and fuel surcharges associated with reward travel can be insured, as they represent actual expenses paid out of pocket.

Smart Travel Tips:

• Keep receipts of taxes and fees paid for reward travel, as these are typically the only reimbursable portions of your trip cost.
• If an airline or hotel charges a fee to reinstate points or miles, you may be eligible for reimbursement if the plan includes such coverage.

Coverage When Using Miles/Points

If you booked a flight using miles or points and the airline cancels your trip, reimbursement for the points lost is generally not included under standard travel protection plans. However, other trip-related expenses, such as hotel bookings and prepaid excursions, may still be covered if purchased with a conventional payment method.

Common Benefits - Overview

Even when booking with miles or points, certain protections may still apply, depending on who you go to for coverage. For example, our Worldwide Trip Protector Plans may still cover the following regardless of whether you booked with points or not. (Additional terms apply to the examples listed below.)

Baggage Delay and Baggage & Personal Effects Coverages: Applies regardless of how the flight was purchased. Baggage and Personal Effects typically reimburses for the actual cash value of items lost, while Baggage Delay can reimburse for the purchase of reasonable additional clothing or toiletries while you wait for your delayed bag.

Trip Delay Coverage: May cover out-of-pocket expenses incurred due to delays, such as additional hotel stays, meals, or transportation.

Medical Expense Coverage and Emergency Medical Evacuation: Unaffected by how the trip was purchased and can be a crucial consideration.

Emergency Situations: Medical emergencies or other evacuation benefits can apply regardless of whether a trip was booked with a conventional payment method or points.

What happens if I mix Paid and Reward/Point-based Travel?

If part of your trip is paid out of pocket (e.g., a hotel stay), that portion can be insured separately and can be covered by your travel protection plan.

Important Considerations When Using Miles/Points

Cancellation Policies

• Some airlines charge a fee to reinstate lost miles after a cancellation.
• Standard travel protection may not cover reinstatement fees unless explicitly stated in the plan.

Insurance Implications

• Ensure you understand what portions of your trip are covered when booking with miles or points.
• If insuring a reward-based trip, focus on covering out-of-pocket expenses like prepaid costs for accommodations and excursions.

Documentation Requirements

• Keep detailed records of all reward bookings, including confirmation emails and any cash payments.
• Save receipts for taxes, surcharges, and any fees incurred.

True or False?

Many travelers overestimate the out of pocket value of their miles and assume they are insurable. TRUE!

Reward flights do not come with automatic refund protection in the event of cancellations. TRUE!

Standard travel protection will not reimburse points lost but may cover redeposit fees if explicitly included in the plan. TRUE!

Some travel protection plans provide limited coverage for reinstating lost points—always check plan details. TRUE!

Tips for Maximizing Benefits

• Use miles or points for flexible bookings but insure necessary out of pocket expenses.
• Keep clear records of all transactions related to reward bookings.
• Regardless of how a trip is booked, consider carrying emergency travel protection for medical coverage and unexpected trip disruptions.
• Choose plans that explicitly offer coverage for reward travel expenses if that is a priority.

Don’t Let Travel Costs Cost You!

Understanding how miles and points affect your trip costs and travel protection coverage can be crucial for making informed decisions. While these rewards can significantly reduce out-of-pocket expenses, they do not hold direct out of pocket value. But, as mentioned earlier, plans such as our Worldwide Trip Protector will still cover things like lost, stolen or damaged luggage, trip interruption and delay, and medical evacuation no matter how you pay for your adventure. 

To make sure that you select a travel protection plan that aligns with your needs, click here to request an online quote.

*The information above was compiled from publicly available sources. Travel protection provided by Travel Insured International and insurance underwritten by United States Fire Insurance Company is not affiliated with any rewards or points programs.