Lions chief executive John Feehan told the BBC that they would not be able to afford any large compensation pay outs if players pulled out or were injured on the June 4-July 9 tour.
And Wilkinson, whose career has been dogged by knee trouble since his match winning role against Australia in the World Cup final is a particular risk.
"We will not insure Jonny Wilkinson's knee," Feehan was quoted as saying by the BBC. "It would not be good business sense to put the whole organisation at risk.
"We will be as fair as we can helping individual players with their cover, but we don't have an open chequebook."
Other England players Richard Hill, Mike Tindall, Will Greenwood and Phil Vickery could also be named on Monday in Clive Woodward's squad for the three tests despite carrying injuries.
The medical insurance bill for the 44-man squad is expected to be more than £ 700,000 pounds ($1.32 million).
