Abstract: Purpose/Significance Common prosperity is an important feature of Chinese path to modernization. Narrowing the regional income gap is an inevitable requirement for achieving common prosperity. Design/Methodology Firstly, this paper attempts to build a Cobb Douglas production function model and theoretical analysis framework that includes non-agricultural employment of rural population in both backward and developed regions, to systematically explain the channels and effects of agricultural insurance on regional income gap. Secondly, through the establishment of intermediary effect model, this paper empirically examines the effect and mechanism of agricultural insurance on regional income gap. Conclusions/Findings Agricultural insurance is an important driving force to narrow the regional income gap, and non-agricultural employment is an important mechanism for agricultural insurance to narrow the regional income gap. Agricultural insurance accelerates non-agricultural employment by improving agricultural production efficiency, thereby reducing the regional income gap. The impact of agricultural insurance on regional income gap will show significant differences due to different levels of non-agricultural employment. Compared with the low level of non-agricultural employment, agricultural insurance has a more significant convergence effect on regional income gap in the middle and high level of non-agricultural employment.