Universally agriculture is perceived to be synonymous with risk and uncertainty. Agriculture insurance is one alternative to manage risk in yield loss by the farmers. It helps in stabilization of farm production and income of the farming community. As such it is a risk management alternative where production risk is transferred to another party at a cost called premium. The ongoing Pradhan Mantri Fasal Bima Yojana is a good step forward to insure risk of millions of rural farmers whose livelihood depends on the pattern and distribution of monsoon rain in India. However, the penetration of agriculture insurance is found to be very less. This study is an attempt to understand the historical background of agriculture insurance, its importance and the existing scenario of agriculture insurance in India. The study concludes with various suggestions for increasing the awareness level of the farmers for ensuring better penetration of agriculture insurance in rural India.