Briefly, when you lose your theme park tickets in Disney World and you've booked through Disney, replacing them takes just a matter of minutes and can be done 24-hours a day since you're in their system. This isn't the case in Disneyland, where you're basically out of luck. For this reason, I bought trip insurance for my upcoming Disneyland vacation.
Fast forward to yesterday: I was looking on the Disney Vacation Club site and noticed that a room had opened up for my travel dates at the Grand Californian, so I booked it right away--through DVC. DVC, in case you're not familiar, is not part of the normal booking system, so I knew I'd have to call Central Reservations and cancel my Disneyland stay that I'd booked through them. No problem--I was saving a ton of money by using my DVC points (just indulge my Disney math here, if you will).
Cancelling my reservation was no problem, except that I'd added insurance. Insurance purchased through Disney is always non-refundable, regardless of when you cancel. So even though my my deposit and the payments that I'd made toward my trip would be returned, I lost $139 of that because I'd added insurance. I'd fallen for a newbie mistake because I wasn't paying attention.
What I should have done is waited to added trip insurance when I made my final payment, since you can always add it anytime before then. In this case, that payment wasn't due until sometime in March. As it is, I am still saving money by using my points, but who doesn't want all their money back?
So take my advice. Add your insurance when you make your final payment, not before. This is true for both Land, World and Disney Cruise Lines. There's absolutely zero reason to add it prior to that time since there are no penalties for cancellation until your final payment is due. Just make sure that you don't forget to add it at that point because you won't be allowed to add it after you make your final payment.