Maybe I didn't notice it before, but I found that on continental.com, one can buy insurance for a reasonable cost against trip cancellation due to sickness, etc, when purchasing a discount non-refundable fare. I know at least one fodorite has complained that his/her airline was unsympathetic against such cancellation.

So, check with your particular airline to see if such insurance is available. Even though it's purchased through continental.com, the policy is underwritten by Access America, which my family has used for several years.

Here are what's covered:

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Trip Cancellation/Interruption*: Coverage provides financial protection for expenses related to trip cancellation or trip interruption caused by a covered reason. Trip cancellation coverage provides reimbursement for prepaid, non-refundable expenses, up to the amount of coverage purchased. Trip interruption coverage offers reimbursement for the unused, non-refundable portion of your trip and increased transportation costs for you to return home due to a covered reason. Some covered reasons are listed below:
- Illness, injury or death of you, a covered family member or traveling companion(s).

- Strikes, natural disasters or bad weather that result in the complete cessation of services by an airline, tour operator or cruise line for at least 24 hours.

- Employer termination if you have been with the same employer for at least three continuous years, and are terminated through no fault of your own after the effective date of this insurance.

- Jury duty, court order or subpoena requiring you to cancel your trip.

- Fire or Flood making your home uninhabitable.

- Certain Terrorist Acts
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As for the cost, I'm pricing two tickets IAH-MAD, for a total of about $1,200. The insurance cost they want is $45.49 for both passengers. I think that's quite reasonable, and is particularly worthwhile if one's booking many months ahead.

That sounds quite useful. Do you know if this insurance is for US residents only, and can you specify the value that you want to have covered, or is it automatically the value of your tickets?

WillTravel - I don't know about eligibility, but the insurance will cover up to US$3,000, per person I assume. That should be enough for most discount fare tickets.

rkkwan, I was noticing that this Access America insurance is also sold with Hotwire airline tickets, and is good for US and Canadian residents. The $3000 limit might be sufficient to cover a prepaid hotel room also. I think it's a good deal, considering the prospect of total loss with nonrefundable tickets. Obviously it won't work for people who want to cancel a trip because of a family disagreement or something.

Northwest has been offering something similar for a number of months now, too.