The policy payout could run to hundreds of millions of Australian dollars, reports Australia’s Herald Sun.
The premium is likely to be several million dollars.
The cover protects the State Government, which carries ultimate responsibility for the Games.
The Victorian Government has twice significantly boosted its Games security budget since 2003.
The Federal Government has pledged Games security spending of just below A$85million.
The International Olympic Committee last year took out insurance in case the 2004 Athens Olympics was cancelled, the first time it had insured one of its events for cancellation.
