Insurance Coverage and Reimbursement
Taxpayers cannot deduct disaster losses for personal use property damage unless they make a timely claim for the insurance reimbursement (if the property is covered by insurance). This rule does not apply to the “deductible” portion of the coverage.
Other “Reimbursement”
Although insurance is the most common form of reimbursement for disasters (and casualties when allowed), other types of “reimbursement” also can reduce the amount of loss. These include:
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Federal disaster loan forgiveness.
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Repairs made to rental property by a lessee.
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Damages received in court settlement (after legal fees and expenses).
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Repairs, etc., by relief agencies.
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Grants, gifts, or other payments designated to repair or replace property., However, if there are no conditions attached to the funds, they are not considered reimbursement.