Certified Meeting Professional (CMP) Practice Exam

What is the purpose of event cancellation insurance?

1. To protect against loss of revenue due to event interruptions

2. To cover the costs of event promotions

3. To provide refunds to all attendees

4. To ensure full attendance at events

The correct answer is: To protect against loss of revenue due to event interruptions

The purpose of event cancellation insurance is primarily to protect against loss of revenue due to unforeseen interruptions. Events can be affected by numerous factors, such as natural disasters, health emergencies, or other incidents that prevent the event from taking place. This specific insurance is designed to mitigate financial risks associated with these cancellations, ensuring that the event organizer can recover some or all of the lost revenue tied to venue costs, vendor contracts, and other related expenses. The other choices do not accurately capture the primary function of this type of insurance. For instance, while it may cover some costs associated with promotions, its main focus is not on marketing expenses. Additionally, it does not guarantee refunds to all attendees nor does it ensure full attendance. The primary aim is to address the financial implications of cancellation rather than attendance logistics or promotional budget management.