Organisers of Wombourne Carnival have cancelled this year's event barely a month before it was due to be held on July 6. It will be the first time the carnival, which attracts crowds of around 3,000, has been cancelled since it launched in 1977.
Organisers have vowed it will return next year but said it was 'highly unlikely' the village would have another carnival procession in the future.
The chairman of the organising committee, Paul Edwards, said members were 'deeply saddened' to have to pull the plug.
Insurance was refused for the carnival because a claim after a young boy broke his leg on a slide has not been settled, it emerged today.
The carnival, always held on Wimbledon Men's Final day, attracts crowds of around 3,000 and was first held in 1977.
Mr Paul Edwards, chairman of the organising committee for the past 10 years, vowed that it would be back 'bigger and better' next year but warned the procession of floats - a central feature of the event - may never take place again.
Mr Edwards said: "It deeply saddened the committee to have to cancel this year's carnival.
"We were left with no alternative but to take this drastic decision once it became clear last Friday that our current insurer would not cover the event and no other insurer was prepared to do so either.
"I had been fighting this for two months but we cancelled as soon as we got a definitive answer from the insurers so that people were given as much notice as possible."
He confessed that it was 'highly unlikely' that Wombourne would have another carnival procession because the cost of insuring it had become too expensive.
The carnival has previously been covered for up to £5 million damages with 48 hour full public liability cover involving the inside of Wombourne Civic Centre, the car park and nearby field with the floats relying on the insurance cover of the lorries that carry them.
The public liability policy paid out around £3,000 to a woman who fell over a piece of netting in 2010 and last year a seven year old boy broke his leg on a slide.
A claim made against the fairground owner in relation to the most recent incident has still to be settled.
Mr Edwards explained: "Because this matter is still unresolved, the insurers say there is still the possibility of a claim against the carnival organisers. That, couple with the earlier pay out, meant our insurers and others were not prepared to consider covering the carnival until the outstanding claim has been resolved."
Police have also made it clear that in future they would expect the event to have additional 'specific parade insurance' that Mr Edwards said was 'prohibitively' expensive. He added: "I do not criticise the police for this since there are obvious concerns that the conventional vehicle cover for a lorry would not cover an incident if somebody fell off while it was being used as a float."
A meeting is being planned for July 4 to discuss the future of the carnival. In the meantime the public are being encouraged to come up with ideas for making it 'bigger and better' in future.
The cancellation of this year's event will not affect the show organised by the Womens' Institute and regularly held inside the Civic Centre as part of the carnival will go ahead as planned on July 6.
South Staffordshire MP Gavin Williamson said: "This is absolutely gutting news that will be met with deep disappointment by everyone. It is a wonderful community event that brings the whole village together and we must do all we can to sort this matter out in time to have a wonderful Wombourne carnival next year.
"I will do all I can to try to ensure that it has a parade as well."