Are Insurance Proceeds For Property Damage Taxable. However, there are also exceptions to this rule. For the most part, insurance settlements for property damage and physical injuries are not taxable income.
To accurately find the extent of the payment, the claim will be completely verified before paying out the proceeds. However, there are also exceptions to this rule. 269, taxpayer may defer gain realized from casualty insurance proceeds that are timely used to repair the damaged and destroyed property or to acquire new property similar or related in service or use to the converted property.