The people who run PrivilegeFlyer/AwardGuard appear to explicitly state that their service is not insurance. One or two recent threads in this topic discuss some of the possible benefits and risks of PrivilegeFlyer/AwardGuard.

Any insurance (or insurance-type) program is based on the concept that, in any one year, relatively few of those who pay the premiums will suffer a loss for which a payout would be warranted. If you're trying to protect your miles in a large airline's program (for example, American or United or Delta), you might want to do some math before signing up for an insurance program.