After the chaos of recent summers — floods, storms, and the long tail of pandemic-era disruptions — cancellation insurance has moved from a “nice to have” to a “must have” for most Australian festival promoters. But the policies themselves are complex, the premiums are painful, and I’ve seen too many operators discover the gaps in their coverage at the worst possible moment.

Let me break down what you actually need to know.

What cancellation insurance covers

At its core, event cancellation insurance reimburses you for costs already incurred and revenue lost when an event is cancelled, postponed, or curtailed due to covered causes. The key phrase there is “covered causes.”

Standard policies typically cover:

• Adverse weather (with specific thresholds defined in the policy)
• Failure of the venue to be available
• Non-appearance of key performers
• Civil authority actions (government-ordered cancellations)
• Essential service failures (power outages, water supply issues)

Each of these has conditions and exclusions buried in the fine print that can dramatically affect whether a claim succeeds.

What it usually doesn’t cover

This is where it gets tricky. Common exclusions include:

Insufficient ticket sales. If your event is underperforming commercially and you decide to pull the plug, cancellation insurance won’t help. It covers events that can’t happen, not events that shouldn’t.

Known weather risks. If there’s already a severe weather warning issued when you take out the policy, or if the weather event develops gradually with ample warning, insurers may argue you could have mitigated the impact. This is a grey area that leads to many disputed claims.

Pandemic and communicable disease. Post-2020, most standard policies exclude pandemic-related cancellations unless you purchase specific communicable disease cover as an add-on. That add-on is expensive — sometimes adding 30-50% to the base premium.

Pre-existing conditions of key performers. If your headliner has a documented health issue that leads to cancellation, insurers may deny the claim if they argue it was a foreseeable risk. New conditions that arise unexpectedly are typically covered.

How premiums are calculated

Festival cancellation insurance premiums are based on several factors: the total insured value (your costs and projected revenue), the location, the time of year, the nature of the event, and your claims history.

For a major Australian festival with $5-10 million in costs and revenue at risk, annual premiums currently range from $100,000 to $400,000 depending on the risk profile. For smaller events, premiums might be $5,000-$30,000.

Weather risk is the biggest variable. A summer outdoor festival in a region prone to storms will pay significantly more than an indoor event or one in a drier season. Historical weather data for your specific location directly affects your premium.

Parametric weather insurance

One newer option that’s gaining traction in Australia is parametric weather insurance. Unlike traditional cancellation insurance, which requires a documented loss and a claims process, parametric insurance pays out automatically when a pre-defined trigger is met — say, rainfall exceeding 50mm in 24 hours at a specific weather station.

The advantage is speed and certainty. If the trigger is met, you get paid. No claims adjusters, no arguments about causation.

The disadvantage is that the trigger might not perfectly match your actual experience. It could rain heavily at the weather station but miss your site, or vice versa. You’re insuring against a measurable weather event, not against the specific impact on your event.

My practical advice

Get a broker who specialises in entertainment and events insurance. Don’t try to navigate this through a general insurance broker. The entertainment insurance market is specialised, and a good broker knows which underwriters will offer competitive terms for your specific type of event.

Start the insurance process at least six months before your event. Leaving it to the last minute limits your options and increases your costs. Underwriters want time to assess the risk properly.

Read the policy document thoroughly. Yes, the whole thing. If there’s anything you don’t understand, ask until you do. The time to find a gap in your coverage is before the storm hits, not after.

And budget for it properly. Insurance is a significant cost item for any festival, and cutting corners here is the kind of risk that can end a business, not just an event.