AwardGuard coverage clarification
 

I have been looking into protecting my USAir miles, given their current financial situation. After researching past threads and e-mailing AwardGuard's Customer Service, I seem to have found a discrepency regarding the extent of their coverage. Since others may be basing decisions on info gleaned through FT, I wanted to provide an update/clarification.

The issue is the level of coverage for accounts with a large number of points, and how many tickets can be purchased under AG's coverage. The FAQ is vague, discussing a $7,500 limit and "per year" but not really answering the question directly.

In thread 05223 - "AwardGuard?" - this question was asked:



The answer came back:


In the same topic, Randy posted:

Perhaps the rules have changed, perhaps the wording is mis-leading, or perhaps I just read it wrong, but to me it certainly implies that there is a $7500 per year redemption limit, but any miles remaining are still in the bank for the next year, when the $7500 annual limit starts again. This continues until your miles are consumed. This limit is on the rate of redumption, not the total value.

However, I posed this question to Customer Service (twice, a few months apart) and got this answer:

To me, that means that even if I bank my million+ miles in USAir, as soon as I redeem 2 F tickets to Europe, at a price of $3,750 each - I am done. Not done for the year, done forever - the remaining million miles left in the bank have no value.

This means the answer given to the first question above is dead wrong - the answer is the exact opposite. Randy's aswer also seems very inconsistent with this.

I am assuming this is all due to rule/coverage changes based on the higher probability of failure. I just wanted to make everyone aware so we are making decisions on proper data.

[This message has been edited by CPRich (edited 11-05-2002).]

A more important question is:

Why are you sitting home with a million+ US Air miles? Get out and go see the world!!!

I've burned 450,000 this year - Europe, Disney with the kids, Carribean - I've still got plenty.

I fly a lot.

CPRich.... In regards to your questions on AwardGuard....as you point out in
your post, there appears to be a lot of information floating around on
different threads regarding AwardGuard. Some posts are from FlyerTalkers and
some of them are from our employees. Rather then who said what when, I think
that the best way to clarify the coverage is to revisit the FAQ's from the
AwardGuard site, which I have listed for you below:

[This message has been edited by Janet at WebFlyer (edited 11-05-2002).]

If this is indeed the case....why would Randy himself post something like this?

Originally posted by Randy Petersen:
QUESTION: Is there a cap to either the number of accounts or number of miles?
ANSWER: No cap on the number of programs covered per membership to the extent of those listed in our materials (it doesn't matter if you belong to 2 or 12 programs) and we don't have an actual cap to the number of miles we can protect for you (some members have millions and with the Midway program, while their award structure was not mileage-based, some members did have covereage equal to about 900,000 miles, which why some 10 years later they are still enjoying their awards courtesy of AwardGuard). The restriction is based on payout per year. For instance, new members can't have claims equal to more than $7.500 in a given year PER program. The reality is that most people may redeem 2-4 rewards a year and most don't exceed that cost. The cost being the claim to supply substitution of awards via a purchased airline ticket.

--------------------------------------------------------------------------------
This implies that the $7500 is PER YEAR and that people from the Midway program have continued to enjoy benefits for some time...like 2-4 rewards a year as Randy states.
If the $7500 is a one time aggregate...then I would have to say that AwardGuard is almost worthless!

If Janet's citation is correct, this is definitely different than what I thought I was purchasing to protect a considerable amount of miles in their covered programs. If there is a total limit of $7500 in coverage (not per year) then I am certainly not going to renew. Some clarification regarding the conflicting citations would be appreciated. Thanks.

Thanks for the confirmation. I either looked at the wrong FAQ or they have been updated in the last few days (I can't even access the site right now to confirm - too many FT'ers checking in?). I recall the ones I read to be a bit murkey, but these spell it out very clearly. The also are in agreement with both responses I've received from Customer Service, so my direct communication with the program has been very clear and consistent.

It is not consistent with what I inferred from Randy's post, and is certainly not consistent with the semi-/mis-information that others have posted here, which is what drove me to publish the note in the first place.

Hopefully many folks will read this so that we are all making decisions with the proper data. This will avoid any ugly situations in the future, should the worst case happen.

Thanks again for the clarification.

This is very disconcerting to say the least. I believe the FAQs quoted here are different than the ones that existed when I signed up last year and renewed in September of this year. Those FAQs clearly stated it was $7500 per year, not a one-time aggregate limit. I am out of town right now, but will be checking the copy I printed off the web last year to see if the FAQs are truly different. Input from Randy on this issue would be appreciated by all.

While I am very interested in the response, my posting here is not to argue with the terms and conditions. Rather, it seems to me that if there is a lifetime limit of $7,500/program, the coverage is no longer of sufficient value, at least to me, to allow for renewal. And I have been a member (on automatic renewal) for many years.

Just a quick point of clarification. We have recently updated the AwardGuard FAQs in an attempt to reduce confusion, but the terms of the program remain unchanged.

If you have any questions/concerns, we encourage you to call AwardGuard customer service at (800) 487-8893 or send an email to [email protected].

It was, I am afraid, a FAILED attempt.

I am completely baffled by the FAQ. http://www.flyertalk.com/forum/frown.gif

Kathy

It definitely is confusing. Why don't they give more examples?

Chris

If you know the URL, you can sometimes read previous versions of a web page on the Wayback Machine at http://www.archive.org/

What a great tool. Check the 09/26/01 FAQ's.
http://web.archive.org/web/200109261...legeflyer.com/

==>Customer Support ==> faq's

These are the FAQ's as I remember reading them just 2 weeks ago. I still can't access the current site to read the current version, to verify what was posted above.

Putting my legalese lenses on, I can interpret this to say $7,500 grand total coverage for each event. The last sentence certainly can lead to misunderstanding - you need to understand what a "claim" is. The newer qording is certainly clearer to me.


Bottom line - If a program goes bankrupt, you get $7,500 worth of tickets max, no matter how many miles you have. And you need to pay the annual fee and remain a member until that total amount is used up.

Agreed?

Again, just trying to clarify to make sure everyone is making decisions on proper info.



[This message has been edited by CPRich (edited 11-06-2002).]

This pretty much makes this coverage "useless" for those of us with large volumes of miles....anyone know of any other way to protect these?

This statement by Randy himself seems to imply other than a $7500 one-time limit. Why does he insert words like "900,000 miles" and "10 years"...these are very misleading.

"some members did have covereage equal to about 900,000 miles, which why some 10 years later they are still enjoying their awards courtesy of AwardGuard").


[This message has been edited by IM4Travel (edited 11-06-2002).]

I don't if I'd use the word useless. This actually makes sense as everyone pays the same amount per year. Covering my 2M miles and Joe Schmoe's 400K miles for the same annual fee doesn't quite seem fair, does it.

I would prefer to see a miles-based premium, just like insurance policies based on payout amount. Get coverage for all your miles, but your annual fee is based on the total benefit/miles protected.

The real problem is that there is no 'premium' program for the outlyers among us.

Originally posted by Randy Petersen:
--------
"QUESTION: Is there a cap to either the number of accounts or number of miles?
ANSWER: No cap on the number of programs covered per membership to the extent of those listed in our materials (it doesn't matter if you belong to 2 or 12 programs) and we don't have an actual cap to the number of miles we can protect for you (some members have millions and with the Midway program, while their award structure was not mileage-based, some members did have covereage equal to about 900,000 miles, which why some 10 years later they are still enjoying their awards courtesy of AwardGuard). The restriction is based on payout per year. For instance, new members can't have claims equal to more than $7.500 in a given year PER program. The reality is that most people may redeem 2-4 rewards a year and most don't exceed that cost. The cost being the claim to supply substitution of awards via a purchased airline ticket."

------

Even though Awardguard should be free to change the terms of their program for future members/renewals, the original terms described by Randy Peterson above should be honored for all current members until their term expires. This is not the first time the terms have changed (originally there was no limit at all), but this attempt to retroactively reinterpret the terms is wrong and unethical.

It looks like Randy is honoring the original terms without any limits for the original Midway FF members, and the same principal should apply here.

[This message has been edited by ananthar (edited 11-11-2002).]

Sorry to bring this up again, but would someone please just tell me which it is:

1) $7500 per program per year (meaning if airline x goes under, then you get a new $7500 each year to use on airline x)

2) $7500 per program, period (meaning if airline x goes under, then you get $7500 to spend and no more than that, whether you spend it in one year or spread over several years)

Thanks.

I take all the above to mean (2) with the proviso that only one of the programs you "insure" went bust in each year. If two went bust in the same year that $7,500 lifetime amount covers both programs.

This might deserve another thread but...How is Awardguard underwritten?

The amateurish membership letter that came along with enrollment last year and lack of information on the website don't exacty inspire me to renew.

Here's a thought:

The absolute worst outcome is if UAL gets broken up somehow, and another airline would like to acquire their FF accounts, but not at the full value (of X trillion miles).

The acquiring airline takes the FF accts, but then offers a 5-to-1 or a 10-to-1 conversion into their existing program. AwardGuard buyers lose both their money and almost all of their miles.

Even valued at a penny or less apiece, this liability is MASSIVE. For an airline like American or Northwest, obtaining "FFlyer loyalty" at the potential cost of billions of dollars is a sucker's bet. If the flying public decided to cash out at the pre-conversion rates, even at standard awards, the planes would be flying full of freeloaders.

Randy's indicated on FT before that AwardGuard is reinsured through major insurers. He also indicated that there were some indications that reinsurance might not be available in the near future, meaning they could not offer AwardGuard to new customers in the future (but that existing customers would be covered), so if you're interested in it, sooner is better than later, especially considering the latest news (which I'm sure is what prompted this to get bumped back up again!).

The fatal flaw of your theory is that you forget that award seats are capacity controlled, so there's not much chance that an airline taking over the miles would have planes full of freeloaders unless they wanted it that way ...

I'll chime in here. I'll stand by what I say. As some of you, even a single word change can dictate a different answer to anyone from a question. If I make a mistake in taking care of our members, i'm the one losing out. As it is now I haven't lost out because we've always been properly reimbursed in claims. The idea being we try very hard to take care of our members - which is why I'll fully put our pst on the factual plate for you to consider (not the wisecracks from those with no experience). AwardGuard, etc. is almost 12 years old - longer than some of your have been accumulating miles. In all those years you'll not find a single compaint to the BBB or anyone else that they were not taken care of properly in any claim situation. Now how can that be unless I've got a 100% happy group of customers. sure. there's only been Midway claims on the AwardGuard side, but you are missing the many members whose expiring miles we protected in the mid-90s for programs like American and United. Far more people were worried and effected by expiring miles then than are worried about United's bankruptcy now. Can you find a single complaint?

If i've made a mistake and you correctly come to me with your interpretation of what i say if two airlines go out of business in the same membership year you might have - then what so you think will happen? I'd like to think that our past is a pretty good indicator of the future. Your choice.

As for the amateurish letter, etc. You're right. We did not go out and spend a sh*& http://www.flyertalk.com/forum/thumbsup.giftload of money on fancy things to make you feel good about AwardGuard. Instead we concentrated on maing this an affordable service for people to get more out of their frequent flyer programs. If this were really a business for us, my guess is that your annual membership fee would be about $347 a year. You decide scootcha if you want to renew. just let me know if you want a real expensive welcome letter for renewal or if you are grateful there is even an option.

As for the other comments about other airlines acquiring the FF accounts from United at a discount. My following comments come from experience and from actual facts. Since the advent of frequent flyer programs - there has never beeen a single case where when an airlines completely goes out of business - other airlines honor those miles. I don't believe you can name a single example. For any of those other "experts" that continue to say other airlines will honor MP's miles, apparently you do not know the history of these programs. Only in cases where another airline actually purchased the other airline were miles and awards given a future. I'm not trying to scare you since I continue to say I personally don't think you need AwardGuard (go ahead, look over my comments on WebFlyers' 'notiflyer) but the "facts" are the facts. Mileage Plus has near one trillion miles of liability. They are the second largest program in the world with some 44 million members. They will give away some 2.3 million free tickets this year. Who in these times could even come close to thinking about free awards? Heck...the reality is that airline know they don't have to honor any free tickets from an airline going out of business (official policies). Why? Well, if United is out of business, every airline will benefit from new passengers without paying for frequent flyer awards. Why would you want to pay for liability when you are going to get the passengers (or at least fair market share) anyway. One of these other "experts" suggested that Delta would honor them if United failed. Excuse me. Why would Delta expend that expense after they got burned in the Pan Am deal? also, with Delta and their current alliance with United - heck, they already really know which of their passengers have a propensity for Mileage Plus miles since they have to tag them anyway when United members fly Delta. Delta could simply go into that base and offer up bonuses to those members without honoring liability or anything else. Honestly, would you blame Delta if they did not honor your United miles? The answer is simple then - you picked the wrong program. As i've said, my millions with United will be good for me tomorrow and the next day and I truly beleive the same for your United miles. I'm only in business by being right on things like this - so I'm not really blowing smoke.

Now, whose got the next question?

But most programs allow you claim an award free of capacity controls at twice the mileage level. Although most people are reluctant to do this, they may be much more willing to do so if miles that otherwise would have become useless get moved into another carrier's program that they have no intention of using on a regular basis.

C'mon, Beckles, I expected a better answer from you than that.

I just checked a few flights leaving Tampa and going to Maui for this weekend. The standard award for 60,000 miles gets me a seat on the plane and back.

Forget the saver awards - people are going to start cashing in the miles big time.

I see a contradiction here. You say that 1. No one will honor United's miles if they go belly-up, and 2. You feel safe with your United miles.

On a related note, I find this whole situation really exciting. I believe that we are going to see more changes in FF programs in the next 6 months than we have seen in the past 10 years.

This board is going to light up as everyone evaluates the major changes - you're going to be a very busy man, Randy!

I've got a few predictions for 2003, if someone wants to start up a new thread. My 2002 predictions did okay - US and UA going bankrupt.

So am I, and I'm still short United.

It was not the look that I was intending to comment on. It is the lack of information about the program in the letter and on the website that concerned me. I don't care if it's in crayon as long as it is adequate. I still have the orignal question as to what/how companies underwrite/reinsure the liabilty of this program.

i.e. would I recognize their name?

I think the lack of an answer IS your answer - there's no underwriter as with a regulated insurance company. Similar discussion here:

http://www.flyertalk.com/forum/Forum1/HTML/005223.html

Actually there is no contradiction. He's saying that if UAL should go away completely, that there is no good reason for DL to assume the MP liabilities. However, he's also saying that he doesn't think that UAL will completely go away.

But I do have a question for Randy - if UAL does go away, which award chart will be used for awardguard claims - saver or standard?

Well, apparently Randy thinks that if UAL goes away, then UA Mileage Plus and all of its miles will go away, too.

I'd be interested to know if Randy feels the same way about US Airways and Dividend Miles.

From the December 5th chat with Randy:

Quite frankly, this is getting frustrating. I'm not sure I even want to deal with a company that cannot consistently answer a simple question. When the head honcho goes on line and says "don't worry, we'll take care of you" and the legal eagles are saying "The $7500 is given only once and is not replenished. You must keep your membership active in order to make claims against your banked miles. We would purchase tickets up to the amount of $7500 or until your miles were used up whichever comes first." (yes, that's a direct quote), the two are obviously in conflict, IMHO.

When it comes to a legal contract vs. an oral/web-posted "I'll stand by you", I know where I stand, having fought the written/signed vs. oral contract battle in court.

I guess it's a personal decision everyone has to make.

Insurance is regulated and while Randy may not agree, I am sure most insurance commissioners would say this is insurance. So if you are concerned, write your state insurance commissioner and ask for the annual report and disclosure documents that are would need to be filed. I highly doubt that any reputable reinsurance carrier would provided support to an unregistered company.

Now, if there is no registration, reach your own conclusion.

Well after reading a lot on this Joh and I will sign up today for this insurance I think. The chances of Mileage Plus vanishing completely is virtually nil, but then again, the premium cost is pretty small - under $100 each it seems. And gives some small peace of mind.

We both lost a pile of miles AND booked award tickets when Ansett crashed, so once bitten, twice shy.

Needing to move 230,000 United out into Hilton last night 3 minutes before they pulled the transfer plug has got me jittery, and I still have north of 500,000 left in UA.

I agree the terms on the website are not clear at all about whether it is $7500 of air travel covered per year you remain paid up in the plan, or $7500 one time only. Randy clearly says it is per YEAR that is covered, and that is good enough for me. http://www.flyertalk.com/forum/smile.gif

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[This message has been edited by ozstamps (edited 03-21-2003).]

Does anyone know how the $7500 limit applies to someone who gets Award Guard, and then adds a family member at the discounted price? Is it then $7500 for the 2 of us combined, or $7500 each?

Thanks.

Probably the best way to get this answered (and all other questions of a specific nature about the product) would be to contact AwardGuard directly.

I must disagree, ozstamps. The terms of the AwardGuard site clearly indicate that it is a $7,500 aggregate liability, not a $7,500 annual liability.

From the program overview:

From the AwardGuard FAQ's:
In some posts here on FT, Randy had said it was an annual liability. When he was then questioned about the discrepancy between his statement and the terms on AwardGuard's site (both in this thread, and in a chat transcript mentioned above), he dodged the question. In any case, I don't see how some contradictory posts here on FT could take precedence over the terms and conditions on the AwardGuard site.

Thanks for input nerd. Yes I agree there has been some confusion over this, having read over the thread. But I can't agree Randy "dodged the question" on chat - he seemed to answer it pretty cleary?

It's actually PER YEAR.

This appears to one of Randy's companies, and it looks to be a very clear statement to me. However as you point out, amending website wording to bring it into line with "$7,500 total payout each year you keep financial in the plan" [or whatever] might clarify things greatly?

It may well be a extension to FT'ers offered somehow via Randy's own blanket miles business insurance, who knows, which means wording needs to be in a particular way?

Anyway, his word alone is good enough for myself and Joh, and we have just signed up. http://www.flyertalk.com/forum/smile.gif

Under $100 each is well worth it - to us anyway. http://www.flyertalk.com/forum/thumbsup.gif



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~ Glen ~

Come visit HERE the most ** FRIENDLY FORUM ** on FlyerTalk. No flame wars, no personal abuse, no substance abuse. Not much of anything really!

More importantly, does anyone know where Randy lives, in case it all goes wrong http://www.flyertalk.com/forum/wink.gif