It depends. Most often, it would not be taxable income. The payout from an insurance policy that you are paying for only becomes taxable income when it results in you being in a better financial situation than you started. Currently, that doesn't seem to be the case for you.
Any amounts received from the insurance company that represents a loss of rental income would be rental income.
Capital improvements would be a new asset only if you do more than just put it back to it's original condition immediately before the leak. See IRS Publication 547 about Insurance and Other Reimbursements
Expenses for such things as drying/dehumidification would be expenses and again, reduce any expenses by the amount of insurance proceeds for those maintenance items. Only deduct expenses above the amount you were reimbursed for such things.
Any payments received in future years would be considered income on your rental activity.
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