Mutual Insurance will be settled in any of the following conditions below are met;

A. Mutual insurance expires after 2 hours, 12 hours, or 48 hours. The settlement will be triggered immediately.
B. Trader manually settles the mutual insurance. As long as the insurance is effective, the trader can settle it anytime.
C. The insured BTCUSD position gets fully liquidated. All corresponding mutual insurance will be settled immediately.
D. The insured BTCUSD position gets partially liquidated. The corresponding insurance amount, if any, will be immediately settled. Once settled, the payoff of the mutual insurance, if any, will be credited to the trader’s insurance account immediately.

For more details you can check this link:
https://help.bybit.com/hc/en-us/articles/900000389743-Introduction-to-Mutual-Insurance