It depends on what the payment was for. If the insurance settlement was for the cash value of your car because you totaled your car, and that was the only amount paid, lets say $3,000, The $3,000 would not be taxable. If the payment included an amount to cover a doctors visit or copay, that amount would not be taxable.
Now if the payment included any amount over your expenses for example pain and suffering, that amount would be taxable because it is considered income.
If you have questions on what your insurance settlement covered see your insurance agent.
