Government subsidy to crop insurance has been advocated as a policy alternative to support growth of agricultural production and farmers’ income in China since the country joining the WTO. However, cautions have been raised as the crop insurance programme may impact the environment negatively. This study tries to explore farmers’ behaviour with regard to agrochemical uses with household data applied to simultaneous- equation system consisted of disaggregated input models. We find that decisions regarding fertiliser, pesticide and agro-film applications do have different impacts on crop insurance participation, and are in turn influenced by the latter in different ways. It is also implied that encouraging farmers’ participation in crop insurance under current low-premium and low indemnity terms may not bring significantly negative impact on the environment.