In relation to the adoption of new technology and capital investment by farmers, risk and uncertainty analyses have become a major concern The main types of risk in most agricultural activities are input and output price fluctuation, production and financial risks. In this regard a number of risk managment techniques, such as crop diversification, future contracts and insurance policy are used by farmers to reduce or remove their agricultural risks in order to decrease their output and income variation.The main aim of this Paper is to examine the role of crop insurance in cotton production. For this purpose 163 farmers out of which 110 were insured and 53 were uninsured randomly were selected from Gorgan region.A comparative study of the social and economic characteristics indicates that there is no significant difference regarding education, age, output (per Hectare), farm size, labor and pesticide costs, between insured and uninsured groups. Fertilizer consumption appeared to be higher in insured group compared with uninsured group; the main reason may be the access which this group had to get the cheaper fertilizer.Regarding the number of crops produed by selected sample, the results were contrary to our expectation. The analysis shows that on average the insured farmers have produced more crops than uninsured farmers.The production function analysis showed that insurance has no significant effect on shifting the production function or increasing the productivity of used inputs.
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