Abstract: The adoption of water-saving technologies in China’s primary grain-producing regions is crucial for ensuring sustainable agricultural development, and how full cost insurance affects the adoption of water-saving technologies has received great attention from various sectors. Based on a data of three major grain-producing provinces of Hebei, Henan and Shandong in 2023, this study employs the Oprobit and Mvprobit models to analyze how full cost insurance influences both the intensity and diversity of water-saving technology adoption and investigates the underlying mechanisms. Furthermore, this paper also conducts a heterogeneity analysis focusing on drought risk by a threshold regression model. Results show that: 1) Full cost insurance significantly enhances the probability of farmers’ adopting multiple water-saving technologies, with the strongest effect observed for the adoption of two technologies. Additionally, it promotes the use of three key practices: deep tillage, underground pipeline irrigation, and drought-resistant varieties; 2) The purchase of full cost insurance enhances farmers’ risk perception and operational awareness, thereby facilitating their adoption of water-saving technologies; and 3) The influence of full cost insurance on water-saving technology adoption decisions manifests heterogeneous effects under varying drought risks, with particularly pronounced promotion effects observed among farmers in high drought-risk areas. Based on the above findings, this paper proposes targeted policy recommendations, including optimizing the agricultural insurance system, enhancing farmer training programs, improving drought monitoring systems, and implementing region-specific promotion strategies for “full cost insurance + water-saving technology” packages.