What effect, if any, does democracy have on outcomes of counterinsurgency wars? Previous studies have provided inconclusive answers mainly because of the challenges involved in testing the question empirically: First, insurgencies are not accidental and the anticipated outcomes also affect whether they break out in the first place. Second, regimes are non-random and their determinants can also affect insurgency incidence and its outcomes. Moreover, different aspects of democracy can have opposite effects on the government's chances of winning. I address these challenges by conducting a critical test to distinguish between different causal mechanisms. I find that domestic institutions that are associated with public goods provision make insurgency onsets less likely. I also show that once we control for this selection effect, domestic political institutions do not influence insurgency outcomes.