Agricultural risk plays an important role in human livelihood, particularly for third worldrncountries farmers are exposed to the vagaries of tragic crop failure. The most obvious aspect ofrnEthiopian rural life is uncertainty, because of the country over dependency on climate sensitivernrain fed agricultural practice, geographical location, and low adaptive capacity making therncountry highly vulnerable to the adverse impact of climate change. Risk management strategiesrncommonly used by smallholder farmers to minimize their exposure to crop production risk arerncontemporary informal traditional ways. On the ground of the above problem by observing thernextent of smallholder farmers risk aversion behaviors and ability, designing and introducingrnrisk transfer approach such as crop insurance has the potential to contribute significantly tornsustainable development. However the program exist as a pilot project, there exist no croprninsurance program developed at national level to manage natural hazard risks for poorrnsmallholder farmers; Against this back log this study focuses on the assessment on farmers'rnwillingness to pay for crop insurance, identify determinants and investigates the willingness ofrninsurance companies to provide the crop insurance program. In the study, a ContingentrnValuation Method (CVM) elicitation technique was used because it utilizes surveys to determinernhow consumers evaluate goods and services when markets are missing. The sample size of thisrnstudy is 120; proportional sample household heads were surveyed. For the coding and analysisrnof the data collectedji-om the household survey, SPSS and STATA were used and analyzed usingrndescriptive statistics and logistiC regression model. The result depicts the willingness to buy forrncrop insurance was found out to be very high accounting for 97. 5 % of farm household heads.rnThe high interest in the service can be due to high vulnerability of the area to different naturalrndisasters. Among those willing to buy, only 36.7 % of the household heads were able to affordrnthe premium. The mean of willingness offarmers to pay for the service was 3,502.25 Birr perrnhectare per year which is very much lower than the demanded insurance set premium of 6, 000rnETB. The other remaining majority (63.3%) were not able to pay for the service. The logisticrnregression result shows that wealth, educational level of household head, size of rain fedrncultivated land, knowledge and adaptive strategy positively determine farmers' partiCipation inrnthe service; whereas, age, dependency ratio, amount of premium set per hectare negativelyrnaffects farmers' decision to participate in crop insurance. In addition when farmers know thernservice being sold, they are more likely willing to pay. Nonetheless, participation of small holderrnfarmers in the crop insurance service greatly contributes to the improved production of crops,rnfacilitate access to credit and contribute for modernization of the crop production. Smallholderrnfarmers are increasingly showing higher willingness and participation and insurance companiesrnhave interest of expanding the access to larger number of users. However, the insurancerncompanies proposed that to realize the implementation of effective insurance service; policyrnimplementation in crop insurance has to get attention ji-om the government side, and much workrnhas to be done in awareness creation. Crop insurance is perceived as a means by which ftlrmersrnare helped increases their income and support to minimize poverty trap, for properrnimplementation of the program in the study area priority should be given for essentialrnagricultural inputs, credit facility, capacity building and public intervention.rnKey Words: Crop Insurance, Climate Change, WTP, CVM.