Would AMEX still pay you if the airline has offered you something? In Denmark and Sweden the insurances we have/had works like this: you need to deal with airlines, if they give you a place to stay you have no claim. If they sent you to a sketchy motel, you may book it but then you need to get the airline to reimburse it first - if they turn it down it's up to our insurance whether they want to cover it. And you need to document that is really a sketchy place. It's not like oh I don't know this motel or I don't like it so I book myself into a Marriott. I would say a Fairfield inn is absolutely reasonable, a clean and safe place to stay. Some might find it too low class or something but airlines don't have to give you 4* Marriott.

These kinds of insurance is used when the airline is not offering anything to you, of course you can always lie about that but if the blogger chooses to do that it's another issue.

If AMEX reimburses you - good for you - If I were you, I'd read the fine print and write to their claims department to verify if it's really true that you can turn down the offer from an airline and booked yourself into a more fine hotel. Insurance companies are known to be sketchy and every time we switch provider we have to read 16 pages of fine prints to find out what they really cover. Despite reading this we still had to go through consumer protection agency to get one of our claims through.