Simply report the insurance company reimbursement for rent as if the tenant had paid; i.e. as gross rental income in the year received. Any unreimbursed expenses (those not paid directly to the contractor but incurred by you) should be shown as rental expense in the year incurred (assuming you are on a cash basis).
If the insurance company has overpaid for your actual repairs, as often happens, that excess must be shown as a negative expense and included in your Schedule E in the year in which the claim was finalized.
