In this paper, we examine factors influencing adoption of the index-based livestock insurance (IBLI) in Kwara State, Nigeria. We apply open-ended contingent valuation technique to determine the amount farmers are willing to pay for the IBLI offering coverage for livestock valued at N500,000 (Nigerian Naira). We carried out this study on household heads who took the traditional insurance in previous years. We also discuss important issues ranging from the IBLI premium cost to the effect of religion, education and gender on adoption of the insurance product. Our results create an initial framework for the acceptance of the IBLI since the product is not presently existing in Nigeria. Acknowledgement : Special thanks to the Africa Regional International Student/Staff Exchange (ARISE) Programme at the University of Cape Town, for the mobility fund to develop this paper at the University of Cape Town, South Africa.