Since 2007, agricultural insurance has made significant developments and has become an important means to diversify agricultural risks and strengthen farmers’ income security. However, in addition to the direct income guarantee function, whether agricultural insurance has indirectly contributed to the increase of the farmers’ income and its mechanism still needs further study. Based on the treatment effect model, using the data of the second phase of the “National New Agricultural Management Entities’ Development Index Survey”, this paper investigates the impacts of crop insurance on household incomes of ordinary rural households, large-scale specialized households, and family farms. Results show that two types of new agricultural management entities in operational income and purchase of agricultural insurance ratio are significantly higher than ordinary rural households. The income from operation, food crops and cash crops of farms with agricultural insurance were significantly higher than those without insurance. Crop insurance has a strong role in promoting household operational income and crop income, but it is difficult to guarantee the income of cash crops. This paper further uses the OLS model to verify the promotion effects of agricultural insurance on household operational income. Results are still stable. In the examination of the impact mechanism, this paper finds that risk taking and management innovation are the intermediate ways for agricultural insurance to affect household operational income and food crop income. Based on the above analysis, to increase the support of agricultural insurance, this paper provides the following policy recommendations: developing insurance types suitable for the new types of agricultural management entities and combining agricultural insurance support with other policies that support and benefit farmers.