Given that climate change is adversely impacting upon the agriculture and tourism industries and the low income labourers in these sectors, this paper reports on household perceptions of climate risks, current coping mechanisms and current coverage of insurance in Mauritius and the Seychelles. The research methodology included a survey of 586 persons, interviews and workshops with stakeholders in the agricultural and tourism sectors of each country. Approximately 42% of persons surveyed had experienced some loss from an extreme weather event, with some respondents experiencing multiple events. The results demonstrated a reliance on personal savings and government assistance as a form of pseudo-insurance, with as many as 65% of respondents indicating that they utilized savings to cope after an extreme weather event which damaged housing and livestock. The general feedback from interviews in Mauritius indicated that government aid is usually provided to the identified sectors when they are impacted by disaster events. For Seychelles, however, government support was less prevalent. The use of such asset depleting coping mechanisms forebode the distinct possibility of having to sell possessions or not repair at all should there be future catastrophe events. These findings advance a sound agenda for policy and practice in the Indian Ocean on matters related to climate change adaptation. By discussing the current status of climate risk awareness and resilience in these countries, this paper offers an argument for the inclusion of microinsurance in a comprehensive risk management plan as an alternative financial risk management tool. Introducing microinsurance products designed specifically for climate and weather risk, and which take into account the shortcomings of traditional insurance, may reduce the vulnerability of coastal communities in the face of climate change.