Abstract: In 2019, the No. 1 Document of China’s Central Government pointed out to explore subsidies by rewards to local governments who carried out agricultural insurance premium subsidy policies for agricultural products with advantages and characteristics. Taking Wuhan vegetable market as an example, this study seeks to investigate whether local agricultural insurance premium subsidy policies reduce agricultural product market risks by the GARCH model. Results show that after the implementation of the vegetable insurance policy, among the 20 vegetable varieties studied, the price volatility of 14 vegetable varieties has been significantly reduced. This means that the implementation of vegetable insurance premium subsidy policies of the Wuhan Government reduced most kinds of vegetable price volatility. The implementation of Wuhan vegetable agricultural insurance premium subsidy policy shows that the implementation of local agricultural insurance can not only protect the interests of agricultural producers, but also stabilize the vegetable market and reduce the fluctuation of vegetable prices. This paper provided some empirical evidence for the effectiveness of the implementation of vegetable insurance premium subsidy policies in Wuhan and also confirmed the role and functions of local agricultural insurance policies. In addition, this study also identified a successful example for alleviating the price fluctuations of other agricultural products. Currently, there are no uniform vegetable insurance premium subsidy measures at the provincial level in Hubei Province. To stabilize vegetable production in Hubei Province, relevant departments may consider gradually developing vegetable policy agricultural insurance across the province.