What is a Buy-Out Provision in insurance?

The Buy-Out Provision in insurance is a stipulation within a policy that allows the insured party to take control over the defense of a claim. This provision enables the insured to handle their own legal defense rather than relying solely on the insurance company for representation in claims against them.

This is beneficial because it provides the insured with a degree of autonomy and potentially allows them to choose their own legal counsel, which may better align with their specific interests or understanding of the case. This level of control can also impact the direction and outcome of the claim, allowing for more personalized strategy and management of the case.

In contrast, the other options suggest different functions that do not align with the essence of a Buy-Out Provision. For example, agreeing to an insurance settlement or being required to accept an insurance company's offer does not convey the aspect of personal agency and control over legal representation characteristic of this provision.