Agriculture is a major economic sector and a critical source of livelihood in many developing countries. It is particularly exposed to adverse natural events, such as droughts or floods, and the economic costs of major disasters may even increase further in the future because of climate change. This unexpected event can lead farmers to poverty if unchecked. Agricultural insurance is a veritable tool that agricultural producers can potentially use to adapt and even mitigate the risks associated with adverse natural events. This paper describes the importance of agriculture in developing countries, how agricultural insurance can complement and enhance risk management activities. This topic becomes imperative because the traditional adaptation practices alone cannot sustain the farmers in the face of changing climatic scenarios, especially in Nigeria where no formal adaptation blueprint is in place. It outlines the various agricultural insurance products available to farmers and the regular perils that insurance policy could cover. It summarizes with the role government play in assisting agricultural producers cope with climate variability.