Travel Insurance Airfare Hack: Make any ticket refundable

Over the last several years, travel news sites and blogs have been offering traveling advice about a recommended airfare hack – buying a non-refundable ticket and adding travel insurance instead of opting for the vastly more expensive fully refundable airline ticket. This little maneuver could save you significant sums of money if you want or need a refund.

It sounds intriguing enough and, for the right traveler, it may be a great idea. But buying travel insurance combined with a non-refundable ticket does come with a few more restrictions than that fully refundable airline ticket. And even non-refundable tickets may be refundable or changeable with many airlines for very specific unplanned events even if you do not have travel insurance (death of an immediate family member, illness that prevents travel, or jury duty, for example).

Travel insurance airfare hack

Still, according to Jonathan Breeze, owner of AardvarkCompare.com, a travel insurance comparison marketplace, combining the purchase of travel insurance and a non-refundable airline ticket is a great option if you are somewhat unsure whether your future travel plans might change and yet you need to purchase that airline ticket today.

HITT Tip: Every airline flying into and out of the United States has an important document called the “Contract of Carriage,” lots of legal-like small print available for you to read somewhere on its website. Our bet is, like most travelers, you’ve been too busy to read it before, but take our word for it, knowing what is in that contract – one that is federally governed and defines the rights and duties and liabilities of the airline and the passengers – can make a world of difference between sleeping on the floor of the airport or getting a hotel room, getting money for lost bags, or perhaps refunds, waiver of change fees, and other things. This is United Airline’s most recent contract of carriage as an example.

Now there are a few differences in benefits and risks to be aware of when choosing between purchasing a fully refundable (sometimes simply called unrestricted) fare or choosing to purchase the cheapest ticket (sometimes called flexible) and adding travel insurance.

Let there be no doubt that if you decide to purchase an unrestricted or fully refundable airfare, you will pay what most consider a very exorbitant rate. If you look at the chart below – a screen shot from March 22 of a sample fare search on United flying from San Francisco to Washington, D.C. – you can see for yourself the price discrepancy. Want to fly on an unrestricted ticket? You will pay anywhere from 4 to 8 times as much as a non-refundable economy fare. Now, for this, you get the airline’s blessing to ask for a full refund or a flight change, even on the day of travel, without penalties or change fees. If you have any status with that airline, you also typically receive significant mileage perks and other benefits (check with your airline) that are not, to us, worth the money you pay, although that may be to some folks.

Caveats and added benefits with travel insurance

It is hard not to ignore the savings possible by opting for a travel insurance airfare hack though. By selecting the $255 economy fare that is non-refundable, and then purchasing travel insurance that will cost between $45 and $65, you spend no more than $320 instead of $1,997. Quite a difference in price! We would suggest you opt for insurance that includes what is known as a CFAR (“cancel for any reason”) clause if you think you might want to cancel, well, for any reason. A screen shot of an insurance fare comparison, with CFAR selected, is shown below.

But do be aware there are caveats: Unlike the unrestricted airfare, you will need to make your decision to cancel your trip a minimum of two days prior to departure. And there are more purchase restrictions if you add CFAR to your plan – read a CFAR description here on AardvarkCompare.com.

HITT Tip: An added benefit of purchasing travel insurance is if you do go on the trip, you now have valuable additional coverage you may not have had otherwise – lost baggage insurance, trip interruption insurance, medical evacuation insurance, etc. Keep in mind that if you purchase your plane ticket with certain credit cards – Chase Sapphire Reserve or American Express Platinum, for example – basic travel insurance benefits are provided. Check with your credit card company for details.

How does the airfare hack work when you need to cancel?

So what happens when you have travel insurance and you need to cancel? If your reason for cancelling is due to illness, a family death, or jury duty or, in some cases, a job requirement, you get 100 percent of your airline ticket money back (a total of that aforementioned $255, for example, since you don’t get a refund on what you paid for your insurance). If you have CFAR and you are cancelling because you are afraid to travel to your planned destination (you were going to Europe but a recent terrorist attack made you nervous) or something unexpected came up (a favorite niece’s wedding), then you will get 75 percent of the price of your ticket refunded, or $191.25 – meaning you will be out $63.75 (plus what you paid for insurance), but that’s still less than you would lose if you did not have insurance.

HITT Tip: Cancellation notice of two days and notice 48 hours prior to the day of departure are NOT the same thing in insurance lingo. You need to know what your insurance cancellation clause really means. If your ticket shows a 10 a.m. departure time on June 5, and your insurance requires 48 hours notice to cancel, you need to let them know no later than 9:59 am on June 3. If your insurance requires two days prior notice on the other hand, you have until 11:59 pm on June 3 to give notice — a very BIG time difference. 

All is not lost without travel insurance, but…

But why can’t I simply contact the airline, pay the change fee, and apply the balance toward another ticket you ask? Yes, typically you can, but again, the amount of a change fee charged is different for each airline. In this instance, the change fee United charges for a domestic flight (assuming you are not an elite Mileage Plus member) is $200 which means that $255 ticket is now worth only $55. And, it is not a refund, but a credit toward a future flight, which you have to use within a year. Meaning you are out $200 and you will need to spend that other $55 quickly. With the travel insurance option, best case is you get $255 back and are out only what you paid for insurance. Or, worst case if you are canceling for any reason (that CFAR clause) you are out the $63.75 we mentioned earlier, plus what you paid for insurance. Learn more about the maze of change fees with this 2014 article from The Points Guy.

HITT Tip: We used a domestic flight for the purposes of this comparison. International change fees differ greatly and are usually higher. Check with your airline on any international cancellation restrictions or higher changes fees.

Little wonder more travelers who want a lot of flexibility in their travel plans are considering the cheapest airline ticket they can find and adding the travel insurance option as the next popular airfare hack.

HITT Tip: Wondering where to shop for travel insurance? Full disclosure, our team currently uses the services of Global Rescue for emergency evacuation insurance and travel insurance, but there are numerous places to shop and compare plans for travel insurance.

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