I asked them this question a couple of months ago, and the answer is that it depends on which benefit you're trying to use.
If you're trying to use a flight related benefit (i.e. trip delay, baggage delay, etc.), then yes, the entire flight cost would have to be paid for with the card. The only exception is using Thank You points.
If you're trying to use a hotel related benefit (i.e. trip interruption and cancellation - and therefore may have a penalty from the hotel), then that benefit would have to be paid in full with the card.
If you want the coverage for a related part of the trip, then you need to be sure that part of the trip is paid for with the card. If you're only looking for protection on the flight, then you only need to pay for the flight with the card (since, on the flip side, you could be staying with relatives and not have an associated cost with the stay).
It took me a couple of calls to Citibank to get that clarification.