So sounds like the scenario of choice when booking stays with onerous cancellation policies would be:

• Use Chase Sapphire Preferred to guarantee room
• If all's well, change the payment card to Chase Hyatt upon arrival
• If unforeseen cancellation occurs, CSP insurance may reimburse you for the cancellation penalty, and any points would be returned.

Does this pass the smell test? Of course reason for the insurance claim would have to meet the criteria for payout of the CSP policy...