This study assesses the potential of weather indexed crop insurance (WICI) to help smallholders cope with weather-related risks in Ethiopia. Focus groups discussions held with WICI policyholders and non-policyholders were analysed using a qualitative descriptive approach with overtones of grounded theory. The results demonstrate that WICI is not effective in helping smallholders cope with major weather-related risks. Inadequate understanding about WICI decreases its adoption, sustainability, and potential to enable households to reduce their risk exposure. We recommend increasing smallholder involvement in the design of policies, offering more effective training, and providing a variety of insurance products covering multiple weather risks.