Field-tested Travel Tip: Should you purchase trip insurance?

One of the questions we receive most frequently from readers is about buying trip-cancellation insurance. This was brought home to us over the summer as we neared the end of a Canadian road trip.  We planned to stay in Calgary as a base for touring the Canadian Rockies.

Unfortunately, the many forest fires out west obscured the mountains and made  the area unvisitable. We never saw the beauty of such delights as Lake Louise and Banff and were forced to cancel some hotel stays.

More recently, fires struck tragically in California, burning 150,000 acres and resulting in dozens of deaths in the northern part of the state; dense smoke reached the popular travel destination of San Francisco. If you had planned a trip there, you certainly would want to cancel your plans. But what about items like airfare that you paid for and that were nonrefundable? Would trip insurance have helped? Well, it depends.

There are many types of trip insurance. Some provide reimbursement for lost or stolen items like luggage or expensive cameras; others will handle medical costs and possible evacuation while you're traveling.

In this tip, we're exploring cancellation insurance for when you can't make your journey. Some companies offer plans that may protect you if you must cancel or delay your trip because of an illness or death in the family. The One Trip Cancellation Plus Plan from Allianz Travel covers pretrip illnesses and other situations that could impact  travel plans. But will it cover you if the destination suddenly is not a place you'd like to be? Maybe, maybe not.

Potentially covered episodes include a terrorist event at your destination within a month of your arrival, a job layoff, and a natural disaster at the destination, such as fire or flood. Such a policy might offer protection for someone planning a trip to an area with major forest fires like we witnessed this year. However, insurance companies won't provide such coverage, for example, after an announcement of a major storm threatening your destination.

World Nomads also offers a trip-cancellation policy but expressly excludes situations where you change your mind about traveling or have broken up with your partner. (In that case, find a lucky friend with a flexible schedule.) The key is to read the fine print and plan ahead.

Should you buy trip-cancellation insurance? A major factor to consider is how much nonrefundable money you have prepaid for the trip and the impact that potentially losing it would have on your financial situation. In our case this summer, the partial penalty for a canceled hotel stay didn't warrant the cost of insurance.

However, if this is a big trip involving a lot of upfront costs, trip-cancellation insurance, like many insurance policies, can provide peace of mind and save reimbursement hassles should your plans change.

Philadelphia natives Larissa and Michael Milne have been full-time global nomads since 2011. Follow their journey on their travel blog, "Changes in Longitude."