the insulator is used for insurance against the battery making contact with anything other than the extended pin when in hybrid mode.
here is an example this one i made for the stingray x, top left
some will say an insulator is not necessary but i like to have a safety factor just in case
you screw the hybrid adapter onto the atty and then screw the insulator onto the extended pin housing, you might have to sand it down a bit to insure the pin still extends so it can make contact with the battery
the reason i had to put a spacer under the 510 adjustable pin on the bottom of the Vulcan is because after some use it would move back inward and i wanted it to be stationary and not move. all atty's may not require this, i'm just sayin...if your going hybrid you want to be as safe as you can be....good luck to ya.