On the federal side, until your itemized deductions exceed your standard deduction, those itemized deductions make no difference. The rules are a bit more stringent for casualty losses though.
You can only deduct losses not reimbursed or reimbursable by insurance or other means. You'll need to subtract $100 from each casualty loss of personal property. The total of your casualty and theft losses on personal property must be more than 10% of your adjusted gross income (AGI).
So from what I see the payment is taxable income. If you're in CA, then I'm fairly certain your loss does not exceed 10% of your AGI after subtracting $100 from it.
