This research examines the effects of commercial insurance on household financial vulnerability using data from the China Household Finance Survey (CHFS). Data were collected from 39875 households in 29 provinces of China. The probit model was used to test the relationship between the study variables. The results show that commercial insurance participation reduces the likelihood of a household's financial vulnerability. Heterogeneity analysis found that commercial insurance participation had a more significant dampening effect on the financial vulnerability of households with low personal expenses, low-income, low human capital, rural areas, and the central and western regions, indicating that commercial insurance has a universal effect. This study offers several policy implications for combating household financial vulnerability. First, improving the commercial insurance protection system in both urban and rural areas could improve households' risk management capacity. Second, establishing tax-rewarding policies to encourage households to participate in commercial insurance. Third, increasing the popularity of commercial insurance, particularly in rural areas, and exploring the rural commercial insurance market.