diff --git a/README.rst b/README.rst
index b363428..0057273 100644
--- a/README.rst
+++ b/README.rst
@@ -130,6 +130,17 @@ To run the tests::
 History
 ~~~~~~~
 
+Unreleased
+----------
+
+If a non-UTF8 file was found when looking for templates, it would fail when
+reading during the reporting phase, ending execution.  This failure is now
+raised in a way that can be ignored with a .coveragerc setting of ``[report]
+ignore_errors=True`` (`issue 78`_).
+
+.. _issue 78: https://github.com/nedbat/django_coverage_plugin/issues/78
+
+
 v2.0.1 --- 2021-10-06
 ---------------------
 
diff --git a/django_coverage_plugin/plugin.py b/django_coverage_plugin/plugin.py
index a3e4867..a60273d 100644
--- a/django_coverage_plugin/plugin.py
+++ b/django_coverage_plugin/plugin.py
@@ -8,6 +8,11 @@
 import os.path
 import re
 
+try:
+    from coverage.exceptions import NoSource
+except ImportError:
+    # for coverage 5.x
+    from coverage.misc import NoSource
 import coverage.plugin
 import django
 import django.template
@@ -303,7 +308,10 @@ def __init__(self, filename):
 
     def source(self):
         if self._source is None:
-            self._source = read_template_source(self.filename)
+            try:
+                self._source = read_template_source(self.filename)
+            except (IOError, UnicodeError) as exc:
+                raise NoSource("Couldn't read {}: {}".format(self.filename, exc))
         return self._source
 
     def lines(self):
diff --git a/tests/test_source.py b/tests/test_source.py
index 76992d3..a4ab11b 100644
--- a/tests/test_source.py
+++ b/tests/test_source.py
@@ -3,6 +3,14 @@
 
 """Tests of template inheritance for django_coverage_plugin."""
 
+import os
+
+try:
+    from coverage.exceptions import NoSource
+except ImportError:
+    # for coverage 5.x
+    from coverage.misc import NoSource
+
 from .plugin_test import DjangoPluginTestCase
 
 
@@ -64,3 +72,65 @@ def test_customized_extensions(self):
         self.assert_analysis([1], name="phd.tex", missing=[1])
         # The editor leave-behinds are not in the measured files.
         self.assert_measured_files("main.html", "unused.html", "phd.tex")
+
+    def test_non_utf8_error(self):
+        # A non-UTF8 text file will raise an error.
+        self.make_file(".coveragerc", """\
+            [run]
+            plugins = django_coverage_plugin
+            source = .
+            """)
+        # This is a template that is rendered.
+        self.make_template(name="main.html", text="Hello")
+        # Extra file containing a word encoded in CP-1252
+        self.make_file(self._path("static/changelog.txt"), bytes=b"sh\xf6n")
+
+        text = self.run_django_coverage(name="main.html")
+        self.assertEqual(text, "Hello")
+
+        self.assert_measured_files("main.html", "static{}changelog.txt".format(os.sep))
+        self.assert_analysis([1], name="main.html")
+        with self.assertRaisesRegexp(NoSource, r"changelog.txt.*invalid start byte"):
+            self.cov.html_report()
+
+    def test_non_utf8_omitted(self):
+        # If we omit the directory with the non-UTF8 file, all is well.
+        self.make_file(".coveragerc", """\
+            [run]
+            plugins = django_coverage_plugin
+            source = .
+            [report]
+            omit = */static/*
+            """)
+        # This is a template that is rendered.
+        self.make_template(name="main.html", text="Hello")
+        # Extra file containing a word encoded in CP-1252
+        self.make_file(self._path("static/changelog.txt"), bytes=b"sh\xf6n")
+
+        text = self.run_django_coverage(name="main.html")
+        self.assertEqual(text, "Hello")
+
+        self.assert_measured_files("main.html", "static{}changelog.txt".format(os.sep))
+        self.assert_analysis([1], name="main.html")
+        self.cov.html_report()
+
+    def test_non_utf8_ignored(self):
+        # If we ignore reporting errors, a non-UTF8 text file is fine.
+        self.make_file(".coveragerc", """\
+            [run]
+            plugins = django_coverage_plugin
+            source = .
+            [report]
+            ignore_errors = True
+            """)
+        # This is a template that is rendered.
+        self.make_template(name="main.html", text="Hello")
+        # Extra file containing a word encoded in CP-1252
+        self.make_file(self._path("static/changelog.txt"), bytes=b"sh\xf6n")
+
+        text = self.run_django_coverage(name="main.html")
+        self.assertEqual(text, "Hello")
+
+        self.assert_measured_files("main.html", "static{}changelog.txt".format(os.sep))
+        self.assert_analysis([1], name="main.html")
+        self.cov.html_report()