jeb - In the situation the RM is asking about, our local DRN chapter, DYDR, is planning on holding an off-road poker run. It will be on private land that is owned by one of the members. The reason for the insurance is to protect DRN/DYDR and the land owner from a frivilous lawsuit.
I'm a strong supporter of the AMA, however DYDR is not a chartered club. Although DRN is chartered and DYDR is a local chapter of DRN I'm still unsure if DYDR would be able to obtain insurance.
Also, as you mentioned, the cost is another factor. Even if we only charged $10 for entry, a non-AMA member would have to pony up almost $50 to ride for a couple hours, which may keep several people from attending.