You do not report this on your return. This 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. So, even if you didn't replace the roof, your roof had damage (currently in the amount the insurance company assesses it to be with the check they sent you). So at this point, you have been made whole. You do not have a gain in your overall asset/wealth. So you would not report the payment on your taxes at all this year.
If they paid you more than the roof was worth, then you would have a gain for the amount they "increased your wealth" and only that part would be taxable.
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