What is Event Cancellation Insurance?

Event Cancellation Insurance is designed to put the financial stakeholders of an event in the same financial position they would be in had their event not needed to be cancelled, abandoned early, relocated, or postponed because of circumstances they had no control over. It covers losses such as anticipated profits, venue and hotel deposits, event management company fees, delegate refunds, supplier and vendor commitments, sponsor reimbursements, communications expenses, and more.

Policies generally cover a wide range of unforeseen disruptions, including:

• Severe weather-related events (blizzards, hurricanes, wildfires, windstorms, etc.);
• Power blackouts;
• Fire, flood, and other physical damage caused to the event venue;
• Civil unrest, protests, and riots;
• Threats or an act of terrorism;
• Labour strikes affecting travel or venues;
• Natural disasters (earthquakes, avalanches, mudslides, volcanic eruptions, and ash clouds that could limit air travel);
• National mourning events;
• Absence of key persons (e.g. a keynote speaker, entertainer, or any individual integral to the success of an event).

Exclusions can vary depending on the specific policy, but the following risks are generally not covered:

• Communicable diseases (including COVID-19);
• Bankruptcy;
• Economic recessions;
• Failed marketing campaigns;
• War.

RELATED: All About Commercial General Liability Insurance: What is it, What’s Covered, and What’s Not?

How much does Event Cancellation Insurance cost?

Event Cancellation Insurance typically costs between 0.5% and 3% of your event’s budget, depending on factors like the size of the event, location, time of year, and whether there are outdoor components. While that might seem like a small percentage, it’s a critical investment that can protect you from losses that are often hundreds of times greater in the event of a cancellation.

When should I get Event Cancellation Insurance?

We recommend securing coverage as soon as significant financial commitments are made for an event—for example, when you start signing contracts, booking venues, or paying deposits. Most insurers will offer coverage up to three years before the event, but not within two weeks of the event start date.

“But Doesn’t Our Force Majeure Clause Protect Us?”

A force majeure clause is a provision in a contract that excuses one or both parties from fulfilling their obligations when extraordinary events beyond their control make performance impossible or impractical. Many non-profit leaders assume these clauses will fully protect them if the unexpected happens—but the truth is, they have important limitations.

Force majeure clauses don’t cover the anticipated revenue your organization depends on earning from a successful event, such as income beyond expenses, grants, donations, or sponsorships. They’re also typically limited to incidents affecting the venue itself and don’t protect against significant drops in attendance caused by offsite disruptions, like airport closures or major roadway shutdowns that prevent attendees from reaching the event.

Event Cancellation Insurance fills these gaps by protecting your organization’s financial position—not just excusing contractual obligations—when events beyond your control disrupt your plans.

Case Study: What Happens a Major Fundraising Event Is Cancelled?

For many non-profits, a single event can be the backbone of their annual budget. Take the example of XYZ Professional Association (XYZPA). With an annual operating budget of $1 million, XYZPA relies heavily on its flagship tradeshow, which accounts for 30% of total revenue ($300,000). Membership dues and corporate sponsorships make up the rest, and the organization maintains cash reserves covering just three months of operating expenses.

Just weeks before their tradeshow, the venue was severely damaged by flooding from a municipal water main break. While XYZPA had negotiated a force majeure clause with the venue, it only covered venue deposits ($180,000). The anticipated profit of $120,000—essential to funding programs and operations—was left unprotected.

Now what? Faced with this sudden loss, XYZPA acted quickly: they implemented a hiring freeze and cut non-essential programming by 20%, launched a six-week emergency fundraising campaign raising $50,000, secured a $50,000 line of credit to maintain payroll, and applied for new grants, receiving $10,000. Despite these efforts, the cancellation still had lasting effects: two programs were paused (-25% service capacity), two staff positions were temporarily furloughed (-30% workforce), sponsor engagement declined (-12% year-over-year), and the organization ended the year with a negative operating margin (-22%).

The lessons learned? Event dependence creates financial fragility, and relying on a single annual event for a large portion of revenue leaves organizations highly vulnerable. For organizations like XYZPA, investing in a Event Cancellation Insurance policy in addition to the force majeure clause could have protected both their balance sheet and their ability to serve members and the community.

RELATED: 5 Advantages of Using an Independent Insurance Broker

How can we help you?

When events don’t go as planned, your protection should already be in place. As a licensed broker with over 30 years of experience serving non-profit organizations, PROLINK understands the unique financial, operational, and reputational risks you face like no one else does. Whether you’re leading a professional association, an AMC, a regulatory body, or a charity—we’ve seen it all, and we’ll leverage our expertise to help you identify, assess, and manage your event exposures with confidence.

Your team works hard to make every dollar—and every event—count. Don’t let an unexpected disruption jeopardize your funding, programs, or stakeholder relationships. With PROLINK by your side, you can stay focused on your mission while we help protect your organization’s financial stability. Connect with us today to learn more!