Event organisers say they have been unable to obtain quotes for the Government's Live Events Reinsurance Scheme.
Association of Independent Festivals (AIF) Chief Executive Paul Reed confirmed cover does not stretch to festivals that cancel if capacity restrictions are reintroduced.
"The scheme only covers you in the event of a civil authority shutdown at either local or national level, so it is extremely limited in scope."
The £750m scheme also doesn't cover artists or workforces scheduled for cancelled festivals.
A recent study found 58% of AIF members are not likely to pursue quotes for the scheme.
"They [the Government] want far too much money and there are too many caveats in it," Reed added.
"I think they just keep paying us lip service like they have done all the way down the line."