Travel Insurance - Tour Only

Did you call Travel Guard and ask about this? As I understand it, the coverage they provide with linkage to the RS tours is a special offer for the RS tours, and maybe they can provide the coverage you want through their other channels. Note that RS has (I think) a pretty generous refund/credit policy on the tours themselves.

Yes I did and no they won't. Very frustrating.

Right or wrong, what I do when taking a RS tour is enter a $0 trip cost on the insurance application. The Rick Steves organization has, as Stan says, a very generous cancellation, credit policy etc. I do insure the flights through the link provided by Travel Guard on his website-med evac, etc. I know there are mixed feelings about the $0 trip cost but it's what I do and the one time I did have to cancel a tour, we just rescheduled the same tour for later that same year. Do check with the Tour Office to get the whole story on this.

https://www.insuremytrip.com/travel-insurance-policies-and-claims/trip-cost/

The price of a travel insurance plan and the benefit eligibility rely
on trip cost. Remember, you must insure 100% of your prepaid,
non-refundable expenses to be eligible for certain benefits. Don't
forget that you can always add trip cost to your plan after purchase.
The key is to purchase a plan as soon as you make your first trip
payment or book your flights. If you add costs as you get closer to
your departure date, you can add this to your insured trip cost, but
know those additions to your trip cost may result in a higher premium
due to some benefit levels increasing.

How much extra is it to include the flight costs ? When I have bought insurance through the airline it wasn't that much ... and didn't cover much.

We did purchase flight insurance through our travel agent when we booked our flights - about $200 each. Non refundable after 10 days. So to double insure our flights if we include them as part of the full trip cost it will cost us an additional $400 each for a total of $600 ea. Seems like a lot of $$, but still not as much as it would have been to add the tour to our existing flight cancellation policy. We might just take the risk this time round and not get tour insurance. The frustration with insurance is that the coverage is not clearly defined. When Travel Guard uses the term "non refundable tour cost" I thought the fact that we have flight insurance makes our flights a refundable tour expense. Apparently not.. So to make matters worse - we had purchased Tour insurance for 2 of our previous tours - which would have been void if we had to use them since we had not included the flights either of those times. Could have just flushed that money right down the toilet. I guess "buyer beware" is a valid phrase in this case.

Interesting.
I am using Travel Guard to insure my flights and medical and evacuation. I told them I did not want insurance on my RSE tour. I don't insure the tour because RSE policies are very generous.
They did not give me any trouble about not including the tour cost.

I also did not insure my RS tour as there is a very short period of risk, IMO, after full payment and before take off, as I recall. And I also have the impression during that period one could reschedule the tour if need be. Try a different insurance than Travel Guard. Did you search 'insure my trip'?

We always use Travel Guard ,Gold Plan, sometimes we insure our flights
( with foreign carriers, )other times we do not. We usually just insure the change fee as you have a full year to use the credit from the airline. We explain that to them. No problems ever. We usually travel independently but if we do take a tour, we cover the deposit within two weeks to cover pre existing conditions. Then we add expenses as they come up including full payment of the tour when it’s due.
I have never encountered the situation you are in. You say you have “discovered” but did you talk to an actual Travel Guard agent? They have always been professional and helpful when we’ve called them.

The real testimony would be from someone who did not purchase coverage for the entire trip cost and mad a claim for cancellation.

Looking at the AIG Travel Guard Gold summary description of coverage:
https://www.travelguard.com/travel-insurance/plans/gold

The "Pre-Existing Medical Condition Exclusion" states:

If you're worried about traveling because you have a pre-existing
medical condition, you should know that on many Travel Guard policies
purchasing your travel insurance the same day you make your first trip
deposit (or shortly after) may qualify you for the pre-existing
medical condition exclusion waiver.

Pre-Ex Exclusion Waiver

The Company will waive the pre-existing medical condition exclusion
if the following conditions are met:

Purchasing the travel insurance with your first trip deposit, or
shortly thereafter as explained in the policy;

The amount of coverage purchased equals all prepaid, non-refundable trip payments or deposits, and the cost of any subsequent arrangements
added to the same trip are insured by the date of payment or deposit
for the additional arrangements;

You are medically able to travel when your travel insurance policy is
purchased.

If you want the pre-existing condition waiver, you need to meet the exclusion limitation or risk denial of coverage. And for older travelers, it seems that everything is pre-existing.