The productivity of agricultural products depends on various environmental factors. Crops that are highly dependent on environment are also at a high risk against various natural calamities such as hail, drought and floods. Agriculture risks affect the farmers as well as others involved in the agriculture business.

They can protect themselves against any loss to their crops due to natural calamities or due to the fall in the prices of agricultural products with the help of agriculture insurance.

There are various types of insurance policies covered under Agriculture insurance such as -

1. Crop yield insurance -
   It is of two types:-
   1. Crop hail insurance: Areas where hails are frequent, farmers can purchase crop hail; insurance to protect their crops.
   2. Multiple peril crop insurance: This type of insurance policy provides coverage against a wide range of natural calamities such as floods, drought, wind storm, frost etc. This type of insurance coverage is usually provided by the government at a subsidized premium rate.
2. Agriculture revenue insurance coverage – This insurance policy protects the insured party from the losses resulting from low yields or low prices. In United States, agriculture revenue insurance is available for soybeans and corn crops.
3. Group risk plan – Group yield plan provides protection against widespread loss of insured crop in a county. Indemnity is paid when the estimated yield of the county is less than the trigger yield level chosen by the farmer.
4. Livestock insurance – This insurance product covers horses, mares, bulls, cows, sheep, goats and other wild animals. It provides protection against losses arising due injury or death of the animal. The sum insured is based on the market value of the animal.
5. Rainfall index – The farmers can protect their protection based on the precipitation received in their area.

Agriculture insurance is a risk management tool for agriculture producers to protect themselves from two major risks of agricultural sector- price risk and production risk. Those involved in this business have a number of options available to manage risk and ensure that their business does not suffer.