Weather derivatives have been traded since 1996 - see
Weather derivatives - Wikipedia, the free encyclopedia
They are now traded on a formal exchange in Chicago for various weather stations in the USA. This is of particular use to energy companies since a very cold winter or hot summer causes a big spike in demand for heating and air-con. There are 2 oft-quoted examples - one is a snowmobile manufacturer offering Canadian customers a money rebate in the event of there being little snow over the 1st 12 months of ownership. The other is a company running a chain of bars whose seating is mainly outdoors - if the summer was rainy trade was usually down, so they purchased insurance against a rainy summer. The data from formal weather recording stations is often publicly available - a definition of 'rainy' in summer for southern Spain might be defined as more than 50mm of rain in period of 30 days to avoid any subjective element on either side
There are insurers in the UK who will provide cover for a particular event (e.g. an outdoor wedding or village fete), often going by the name 'event cancellation' insurance.
Perhaps not as big as home or car insurance, but weather insurance is being actively done.
An insurance offering an advance cancellation option for a holiday need not cover the 14 days - it could perhaps be invoked on the day of departure by the national met office forecasting heavy rain (e.g. at least 2mm) every day for the 1st 5 days (which can be forecast with a good degree of accuracy) of a holiday - if it occurs, this would be enough to make a serious dent in anyone's summer holiday.