Does insurance cover my frequent flier miles?

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After a medical emergency, James Wright uses frequent flier miles to pay for a return flight to the United States from Australia. But now his insurance company is balking at a refund. What can he do to replace the miles?

Question: Last year, while I was visiting Australia, my wife had a medical emergency that caused us to cancel our trip and come home. Fortunately, we had bought a travel insurance policy through Allianz.

I called the insurance company from our hotel in Sydney and asked for assistance in getting us home in a timely fashion. The person who handled our case was most helpful, booking us a flight for the next day to San Francisco on United Airlines.

The Allianz representative used 320,000 of our frequent flier miles to get us back home. This is on top of the 255,000 miles we already had used to get to Australia. Allianz has refused to compensate us for the miles. Had I known that I could not claim frequent flier miles under this policy, I would have paid cash, been reimbursed and be 320,000 miles better off than I am today.

Can you help? — James Wright, Corte Madera, Calif.

Answer: Some travel insurance policies don’t cover flights booked with frequent flier miles, and that makes sense, at least on one level. After all, what’s a mile worth? You might have one number, the airline might come up with a different one, and, well, you probably already know what I’m going to say next; loyalty programs are practically worthless — but that’s another story, and I’m not going down that rabbit hole today.

The disclosure should have happened when you purchased your policy, which means that the Allianz representative or agent you talked with should have mentioned that your mileage flights wouldn’t be covered. And certainly, the representative you called after your wife’s medical emergency should have clued you in to the fact that once you cashed in those 320,000 miles to fly back home, they were gone.

It’s highly unusual for any insurance company, let alone Allianz, to drag its feet on a claim request like this one. But again, the reasons are understandable. In your claim, you valued your 320,000 miles at $35 per 1,000 miles, plus 7.5 percent tax, which comes to $12,040. That’s no small sum.

If you find that an insurance company is stalling, you can always send a polite appeal to someone higher up the food chain. I list all the names and numbers on my consumer-advocacy website.

I contacted Allianz on your behalf to see whether there had been a misunderstanding about your policy. Turns out, there hadn’t been. The policy you purchased didn’t explicitly cover tickets booked with frequent flier miles.

You didn’t like that answer (and neither did I), so you decided to appeal to your state’s insurance commissioner. After several months, Allianz cut you a check for $11,257 — the amount it calculated you would pay to replace the miles.

“We believe there was a miscommunication over whether he should use points or pay for his ticket home,” an Allianz representative told me. “We apologize for that miscommunication.”

Should Allianz have honored this claim?

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