It depends. Generally, legal fees are deductible if they were incurred to produce or collect taxable income. So it depends on what sort of claim you were making to your insurance company. If the income is considered taxable, then the attorney fees are deductible.
If it was to collect damages received from personal injury, for example, the income would not be taxable and therefore the legal fees would not be deductible. Insurance payments for damaged or stolen equipment are taxable if they are more than your cost basis, taking depreciation into account.
@ckambol
