This study describes the importance and development of agricultural insurance sector in Uzbekistan. Agricultural insurance sector in Uzbekistan was established with the state initiative and government organizations still play an important role in service provision. However, agricultural insurance functions without state subsidies and about 30 percent of the crops are insured. This is comparatively better result while compared to other countries in the region. However, sectors still has several development constraints which are not discussed in the international literature. Therefore, the objective of this study is to describe the development path and challenges in agricultural insurance market in Uzbekistan. Discussions in the study show that access to favorable credit and very high risk averseness of agricultural producers created demand for agricultural insurance in the country which is functioning without the state subsidies. However, premium rates currently charged seem to be very high when compared neighboring countries who subsidize agricultural products. Furthermore, lack of coverage during the systemic drought years could be considered another challenge constraining further development of insurance market in Uzbek agriculture. Establishment of index insurance market could be considered as an alternative option to provide coverage during the systemic drought years since price of the index-based products lower than multiple crop insurance products.