Protecting myself against costs for overnight weather-related cancellations

Question

About a month ago, I had an domestic round trip between AUS and SJU via American on bereavement. I paid the trip directly on American's website with my Chase Freedom Flex through PayPal (for the 5% cash back bonus).

On the return trip, I laid over in Miami, but a passing storm in Austin caused the 9 pm flight to be canceled for weather.

The rebooking agent's next available booking to AUS would have been the same nighttime flight for the next day (a 24 hour wait), and the next best itinerary was a morning flight to IAH with a one-way rental car to be paid by me. Other nearby airports (SAT, DFW) were not available.

Ultimately, I found it simplest to book a morning nonstop from FLL-AUS via Southwest, which ran smoothly. The fare was $500, plus $100 for Uber. Fortunately, I was able to stay with a distant relative in Miami, so I didn't have to pay for a hotel.

A very kind representative from American was able to refund me to my card, but it turned out to be a paltry $85 (the determined cost of the canceled segment) out of the total $550 fare.

After reading the policy text further for Chase's trip interruption, I learned that it only covers any remaining booked itinerary items that I am unable to use (e.g. cruises, hotels, tours), not the cost of new travel to get back home. I filed a claim anyway and was denied completely, even for the cost of my original canceled flight.

After some hours of research, I was frustrated to find that most credit card travel insurance policies would not have covered this case, even if it's cheaper to buy a new ticket than it is to wait it out. A "normal" policy purchased separately might have covered alternate transportation.

Seeing as the airline may not have a reasonable alternative for a cancellation, and the cost of new travel could be much greater than the original fare, the financial risk of a weather cancellation seems unbounded, and the scenario looks likely to happen again in my future travels.

How can I protect myself from unexpected costs from a weather cancellation? Seeing as US airlines don't owe me anything other than a rebooking or a refund (of unknown amount), and alternate transportation isn't covered by many policies, is the best way just to self-insure and try for morning flights?

Answer 1

is the best way just to self-insure?

That's what I do. Personally I found most forms of travel insurance to be either useless or a very bad deal. Almost all policies come with an impenetrable jungle of terms and conditions which contains a very long list of exclusions and claim restrictions. Typically there is a huge discrepancy between the advertised coverage and the actual coverage.

A very common restriction is "we pay last". In other words: if there is someone else to blame, the insurance is off the hook. So in your case most insurance would deny your claim since it's American's fault and they need to pay.

Many travel insurances cover "travel interruption" which your case would be. Again, you would have to plow through the fine print to determine whether any specific policy would cover your specific case. Could be "we don't pay at all", "we pay what American didn't", "we pay all of it" or something else. Decent trip interruptions insurance will cost you at least 5% of the trip price, so if you have this issue less often in 1 then 20, than you are better off self insuring. That's certainly been the case for us. I've been on hundreds of flights and I don't recall a single case where I had to make alternative arrangements by myself. There have been plenty of operational interruptions, but the airline always found an acceptable workaround. Granted, I've gotten very experienced and good and negotiating these :-)

Notable exceptions for insurances worth having:

1. Credit Cards that cover world wide collision damage waiver for rental cars and are issuing a certified letter stating that (which some rental places do require).
2. Medical travel insurance medical cost that's not covered by your primary insurance. An absolute must have for everyone travelling to the US (unless you have full coverage through your primary).

Answer 2

First, note that if you had used the original alternative they provided, they would likely have covered a hotel night and a few incidentals (at least they used to, no idea what the policies are nowadays). So basically it was a choice between "wait and they will vaguely take care of you" and "find a quicker alternative but on your own dime".

Also, they have quite a few other flights on that route (4 daily direct and many, many more with a stop somewhere), so if the only option they gave you was 24 hours later, the earlier flights must have filled up pretty quickly. This is quite common when there's any kind of large-scale disruption (especially during busy periods) as they have lots of people to rebook, but that looks like a lot. In those cases, what helps is frequent flyer status (and buying more expensive fares, of course), as that usually gives you priority for the best options. Making sure you are among the first requesting rebooking is also important, of course.

When it comes to credit card insurance, American Express cards used to have pretty good coverage, but this seems to have been drastically scaled back over the years for many cards.

They seem to still have a few cards with vaguely decent coverage in this situation, but they're all either Platinum or Centurion cards, with a sprinkling of Delta Reserve and Marriott Brilliant (I haven't checked the terms for all of them), so probably cards on the rather very-expensive-to-extremely-expensive side. You can check their respective terms on this subject (the policy is provided by a third party) here: https://www.americanexpress.com/us/credit-cards/features-benefits/policies/trip-cancellation-terms.html (as usual, have your favourite headache-fighting medication on hand).

If you travel a lot they may be useful (but if you travel a lot that usually means business travel, so you wouldn't be the one picking up the tab anyway), but the coverage seems to be quite limited in comparison to their cost. A quick glance through the policy for the Platinum card seems to limit the coverage to the cost of a direct economy ticket on that route (but I haven't tried to determine with any kind of certainty whether it would actually have worked in your case). Amex policies have seemingly pivoted to "we'll help you spend your money" rather than "we'll help after you have spent money"...