what if I have to cancel my reservations - refund??

That would depend on the cancellation policies of each place. Make sure you know what they are before you book.

Anabelle, you are the only one who can find this out,, you need to read the information posted on each hotels booking site,, it is usual pretty clear on cancellation policies. I as a rule do book hotels that have good cancellation policies,, but even those do not refund money if you cancel with less then 24-72 hours notice( it varies from hotel to hotel). I never pay for my whole stay up front, it will sometimes get you a further discounted rate, but those deals are almost always a 100% non refundable. So think as you book. I have booked rooms in Paris early, to get good rates, then see another hotel that is better , so I cancel first one and rebook with second one,, but,, there is almost always a 5 euro ( or about) booking fee you will not be refunded.. Since my savings are always going to be more then 5 euros I just eat that fee. Hostels have their own rules. The only solution is to contact that hostel and ask them their cancellation policy. Its really quite simple to work it so that you will have some flexibility,, but do your homework!!

Only once have I cancelled a reservation in Europe. I wanted to go to Burghausen and stay in the Altstadt, near the castle, but I was having trouble finding a place that wasn't booked. Finally I settled for a place in nearby Altötting, which was on my way to and from Burghausen. Altötting has a booking website with a contract (in German) with cancellation penalties. Right after I agreed to the contract I found an available place in Burghausen. Fortunately the first cancellation penalty was for a later time, so I could cancel without penalty. In my experience, small places don't require a deposit or have cancellation penalties (but, to be polite, I would inform them as soon as possible if I are going to). Big, chain hotels or accommodations in popular attractions usually require a non-refundable deposit, so avoid them. Booking websites often show two rates for a room, one significantly higher with "free cancellation" built in.

Good advice from Nancy. Also, there are times I will book some accommodations with "severe" cancellation policies due to great locations, rates, etc. Typically, given our characteristics (age, sex, etc.) and cost of trips, the marginal cost of including cancellation insurance on top of a medical policy is very modest and manages this risk nicely as well as other out-of-pocket costs such as airline re-booking fees and the like if a trip must be scrubbed or curtailed.

Excellent point, and even "cancel for any reason" really won't let you cancel for any reason at any time for a 100% refund...there are restrictions and limitations that must be understood. Before purchasing, ask a rep to e-mail you a copy of the certificate of insurance (i.e. the contract). I once had to ask Travelex to send it because it wasn't available on their website. Access America has their copy right on their site. When you read through customer reviews on all the big insurers, they're all over the board...a lot of good and a lot of bad reviews for every carrier. When you sort through the details, however, you'll find that nearly all of the negative complaints are due to customers wanting the carrier to cover an item that clearly wasn't covered according to the policy (but the customer thought it should have been...they didn't read the details prior to purchasing). If you understand the contract and your coverage well, you'll have no issue whatsoever should you need to file a claim.

It's good advice to consider a basic travel insurance policy. The cost is minimal, and depending on the policy, you'll be covered for many pre-paid expenses, such as hotels or airfare. The change fee alone on an airline ticket can be $250 plus the additional cost (if any) for a new fare later...a good policy will cover that for you. Lots of people get pissed when they have to cancel and end up losing a deposit, first night's room rent, etc. I can recommend Travelex or (better IMO) Access America. Check out insuremytrip.com.

To add to what Michael said, trip insurance covers you IF you cancel for one of their accepted reasons ("any reason" cancellation insurance can be costly), so be sure you understand the terms of any policy you consider purchasing.