Buyout Settlement Clause

A "buyout settlement clause" is an insurance clause that allows the insured (person or business buying the policy) to refuse to allow the insurance company to make a settlement offer to settle a claim on their behalf.

Say someone accuses you of backing into them in a parking lot, and you know you didn't. Your insurance company may make an offer to the person saying you did it just to get it over with and keep out of court (which would keep costs down and save everyone time). With this clause, you can refuse to let them pay the accuser. But if you do...you release the insurance company from any responsibility in this case. They're not obligated to defend you against the accusation, or take any further action on the claim. You as the insured are on the hook for all aspects of your defense, including legal fees and investigating the claim to prove your case.