I usually do not... if i had an aging parent that was sick or some other 'inside' knowledge that would make increase the chances i would need to cancel then i would consider it (or if i was traveling internationally since there are more moving parts involved in that), but i'm statistical in nature so i take a probability point of view:
If the hotel above (before resort fees since those would not be paid if you for whatever reason did not show up at the hotel) cost ~$300 and the insurance is ~$20, i figure the insurance is about 6.5% of what my 'loss' would be. So it comes down to whether or not i think have a greater than 6% chance of needing to cancel for a covered event.
I italicize the last part of that sentence as there are many events that would not be covered by the insurance (for example, 'epidemics' are an excluded event so it would likely not apply given the current situation). There are lots of other exclusions for which insurance companies would not have to pay so i'd prefer to 'self insure'. As well, i would also have some sort of travel insurance from my credit card company (not sure what it does/does not cover), and there is always a chance that the booking company (priceline/hotwire) would allow for a refund (or issue a credit to be used on a future purchase) should things get even worse. The companies have been 'pretty good' in the past of allowing cancellations/issuing refunds when there were location specific issues, but they may take a harder stance in a nationwide/worldwide epidemic since it would have more of an effect on their bottomline.
So far playing the odds has worked in my favor, but it only works until it doesn't, so you have to weigh your own tolerance for risk and if there are any factors in your own life that would increase/decrease the probability of you needing to cancel the trip.