Travel Insurance + Credit for Travel Not Taken

In My Humble Opinion
1

When I file a claim against my travel insurance company and get my money back, should I also get credit from the airline and/or hotel?

I was planning to travel to Arizona in April 2020. I canceled the trip with the airline due to Covid quarantine requirements (my companion was traveling from NY) and filed an insurance claim with Allianz. They sent me the full amount of our airline tickets (the amount of my claim). But I also got credit with the airline.

Assuming the airline would eventually figure it out and remove the credit from my account, I ignored it, but it hasn’t gone away, and my opportunity to use the credit expires in March 2022.

On the one hand, I think it was a mistake, or some kind of a Covid glitch - it was so early on that nobody knew what we were in for or how to deal with it. On the other, it seems like maybe this is how it’s supposed to work. There might have been a question when I filed the claim like, “Are you expecting compensation from any other party?” to which I would have answered No, because I wasn’t. And anyway, I don’t want airline credit, I want my money back, which is why I bought a policy in the first place. I didn’t ask the airline for credit - it happened automatically when I canceled the flight.

And if it operates like other insurance policies, do they care if I’m essentially being compensated twice? If I dent my car, I can get a quote and submit it to the insurance company and they send me a check. They don’t care if I fix the dent myself, or if I never fix the dent.

And now I’ve got a similar situation. My extended family (nine people, three generations) had planned a trip to Aruba over Christmas. My brother-in-law’s mother died two days before we were to leave, so more than half of us definitely couldn’t go. I called Allianz, who said that a death in the family is a sufficient claim for our entire party, so we canceled the trip (I canceled the flights, and asked the travel agent I’d used to cancel the resort), and I filed a claim.

Allianz will take some time to work through everything (holiday travel + Omicron meant a LOT of claims in December), and I can’t guarantee that the claim will be accepted, so I’m also trying to work with the travel agent, who has total control over our resort reservations and who completely messed up our flight reservations (because of the way she booked the flights, my husband got credit for five flights, my niece got credit for four flights, and the rest of us got nothing). Her position seems to be, “I don’t know why you’re bothering me to do this when you filed an insurance claim and will get your money back.” I don’t want credit, but I want credit more than I want nothing, so I’m pursuing it until I get confirmation that our insurance claim is accepted.

I’m happy to answer any questions, and welcome any advice!

2

The whole point of supplemental insurance is that it adds to whatever you might already be entitled to. For example, I can get insurance that pays out if I have to miss 10 or more days of work due to serious illness or injury. I’m not getting “paid twice,” I’m getting paid once from my primary insurance and once from my supplemental insurance because I’m entitled to both payouts.

Travel insurance is the same deal - the insurance is separate from any compensation you’re entitled to from the airline. The tricky thing is that airlines are very good at finding ways for you to not be eligible for compensation. That’s why travel insurance is good.

3

I expect you did, in fact, say something like this when you filed the claim and that may make all the difference. But I’m really not sure. This is going to depend on the specifics of your policy and I haven’t read it.

I suspect that if you knew or reasonably should have known that the airline was going to reimburse you in cash for your flight, you shouldn’t have filed for an insurance claim because you didn’t, in fact, suffer a compensable loss. But the airline didn’t refund your ticket, they gave you a credit that had an expiration date. The credit is worth less than cash. I don’t know what your insurance policy said about how they would reimburse you if the airline gave you a travel credit instead of cash. My hunch is that the insurance company would treat the travel credit as a full reimbursement. Insurance companies look for lots of ways to reduce their liability for claims. This seems like one they would anticipate and account for.

You should read the policies and try to figure out how they handle travel credits.

4

So I looked on their website and might have to walk back my entire previous post. They have this on their FAQ page:

  • What do I do if I receive both a refund from my travel supplier and a reimbursement from Allianz Partners?

  • If you receive additional reimbursement for this claim, please contact our Recovery Department and reference your claim number in your correspondence. Unless prohibited by law, you may be required to return excess funds if they exceed your total amount of loss. We and your plan’s underwriter(s) each reserve our respective rights, remedies, and defenses under this plan and applicable law.
    –

5

I did see that on the website, but I didn’t receive a refund from my travel supplier - I received a credit. I’d happily return or reject the credit, but that doesn’t even seem to be possible. The only recourse that I can see is to just let the credit expire.

6

We’ve got some stuff like this in the policy:

A. TRIP CANCELLATION COVERAGE
If your trip is canceled or rescheduled for a covered reason listed below, we will reimburse you for your nonrefundable trip payments, deposits, cancellation fees, and change fees (less available refunds), up to the
maximum benefit for Trip Cancellation Coverage.

… and there’s “less available refunds” in there. Totally fair. But I didn’t get a refund from the airline (or almost definitely, in the case of the Aruba trip, from the resort).

7

[Moderating]

This looks like a request for professional advice, and as such, belongs in IMHO, not FQ. Moving.

8

During a cruise to Alaska, my wife and I both became sick. We missed out on 2 excursions, the one we did take my wife suffered greatly. Our cabin attendant let someone know about this, we each received a $400 shipboard credit on our return leg to Seattle. I got me a nice Citizen watch, my wife got some jewelry and some souvenirs. After we got home I decided to file a claim with AAA, we had purchased trip insurance with them. They refunded the cost of all 3 excursions and 2 days of the cruise. I never mentioned anything about the shipboard credit and they never asked.

9

The fact that Allianz wants you to contact them and say, “oh by the way you don’t have to pay me the full value of my trip” makes it seem like they don’t really have any way of knowing unless you volunteer the information. The “unless prohibited by law” clause implies that there are certain jurisdictions where they’re not allowed to count ‘travel supplier’ reimbursements against your claim.

None of that should be construed as legal advice since I am, in real life, a certified Grade-A Moron.

10

That’s similar to what happened to me with my AZ trip in 2020. Maybe that’s what always happens? It’s just so weird to me that it’s not easy to find an actual answer to the question. This must happen to people all the time.

It also seems like it would be pretty easy for bad actors to take advantage of this. My insurance policy included full reimbursement with as little as a letter from my employer saying I couldn’t get off work for the trip. Don’t people game the system in order to receive airline/hotel credit plus cash back?*

*I definitely did not, and would not, do this.

11

Update: things are still rolling along. Every now and then I receive a letter from Allianz asking for documentation (so far I’ve provided the death certificate, obituary, reservation and itinerary from the travel agency, credit card statements showing payments, flight and hotel confirmations), and, once submitted, they tell me that the claim is under review, etc. I think I’ve finally gotten to the bottom of the list of documents, and today received a request for what I assume is the last one: a letter on company letterhead stating that we have not received a refund for the trip. It doesn’t say who this letter is supposed to be from. I’ve asked my travel agent for the letter, and I assume this is about as far as I’ll be able to go, and I hope Allianz accepts it. Well, first I hope she’ll send it. She’s been absolutely unwilling to help me with anything so far. Can you imagine how impossible it would be for me to get a letter on letterhead from JetBlue itself stating that they have not given me a refund? And from a resort where I was never actually a guest, in another country? I expected hoops and I’m prepared to jump, but this seems like an awfully big requirement. If I can’t produce the right documents, they’ll assume that I did get a refund?

Thanks for the comments so far. It’s surprising to me that this isn’t a more common problem.

12

Ha! How naive I was on March 10. It turns out that the travel agent spent the next month avoiding and ignoring me, and never did send me the letter I needed, so I did have to get a letter from JetBlue itself stating that they had not given me a refund. That took hours and hours of time spent on hold and then talking to confused customer service agents. They had to send me 18 letters: one for each traveler in each direction. The process went like this: I’d call and be put on hold for approximately two hours. An agent would get on the line. I’d explain the issue. They would look in their system, then get on the line to tell me, “Oh. Those flights were refunded in full.” I’d reply, “JetBlue gave me Travel Bank credits. I don’t want credits. I want cash. I’m working with my insurance company to get a cash refund from them, but I need verification from you that JetBlue did not give me a refund.” They’d say, “Oh! I’ll issue the letters. You’ll receive them in three to four business days.” The letters would sometimes have the wrong year. Or I’d receive letters for four of the nine travelers. Or I wouldn’t receive anything at all. Repeat process.

I finally had all 18 letters with correct names, departures, destinations, and dates. Sent them to Allianz. I followed up each week for a few months, explained the whole situation to a new agent every time, and FINALLY, somebody said that the refunds had been issued.

In the end, we did receive the cash refund from Allianz, and we did not lose the JetBlue credits.