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AbstractFaced with fast changing environment, livestock epidemics and EU accession, risk management is of utmost importance for Croatian farmers. Insurance is risk management strategy which enables risk transfer from farmer to insurance company. It has a positive effect on income stabilization and consequently could lead to higher level of specialization, credit access and competitiveness. Nevertheless, livestock insurance is relatively unimportant on dairy farms. Reasons are twofold. Uncompleted requirements for risk to be insurable, adverse selection and moral hazard problems reflect on untoward premium rates. Demand for insurance, on the other hand, depends on the farm structure, access to other risk management instruments as well as dairy farmer’s management capacities. The objective of the paper is to analyze risk management on dairy farms with focus on livestock insurance. Survey on 20 farmers in the Northwest Croatia has been made. Farmers’ risk perceptions, application and evaluation of risk management strategies were collected. Governmental insurance premium subsidy was also analyzed. Survey data were analysed by descriptive statistics while decision analysis toward livestock insurance with stohastic decision tree. European Union experiences with livestock insurance presented stand in creating suggestions for possible setting out of current constraints of livestock insurance in Croatia.