I haven't done a party, but I've done several children's groups. They love grooming. If it is mostly a girl's party, you could bring ribbons for braiding, nail polish for the hooves, finger paint so they can "paint" their hands on the horse, or colors of vet wrap. I would NOT let them give treats to the horse, as this would risk nipping. Ask the parents to provide the children with closed toe shoes. If ALL the children are under 50 pounds you could invite them to sit on the horse, but if even one of the 6 year olds is chubby, you should not let any sit on the horse--I'm talking about and A size horse.
I've done all these things without insurance for several years, but I'm getting nervous about doing it in the future. Insurance is expensive unless you plan to do lots of parties. At $350 a year for equine insurance, one estimate I got, you could charge $50 for a party or event and maybe pay for it.