Risk coping strategies adopted by the households in the event of illness depends on the accessibility to healthcare financing mechanisms including health insurance. The empirical evidence on the effect of microhealth insurance (MHI) on the risk coping strategies of the households is scarce. This paper evaluates the impact of Sampoorna Suraksha Program, a nongovernmental organization-initiated MHI scheme and the risk coping strategies of households faced with medical illness in Karnataka state, India. In this descriptive cross-sectional study, we collected data from 416 insured households, 366 newly insured households and 364 uninsured households in randomly selected 10 taluks in three districts of Karnataka state, India. We hypothesized that insured individuals rely less on ex post risk coping strategies (borrowing, use of savings and sale of assets) compared with uninsured and newly insured individuals. Our hypothesis was tested using logistic and linear regression analysis. A significant difference among insured, uninsured and newly insured individuals was found for borrowing but not in the use of savings or sale of assets. A positive impact of MHI on illness-induced borrowing (both incidence and amount) was evident. The evidence from this study reinforces the role of MHI as a pivotal financing alternative to out-of-pocket expenditure in India. Copyright © 2013 John Wiley & Sons, Ltd.