The payout for lost rents is rental income. It flat out does not matter when or if you converted it to personal use. It still gets included in the rental income.
If you "bank" the payout and do not use it for restoration/rebuilding in the same tax year as the payout, then that payout is also rental income. That's because there's nothing that says you "have" to rebuild. You can very well pocket the money and never rebuild if you want. Typically, the taxability of that will be offset a little (not totally) by the loss you claim in the Casualty and Thefts section under the Deductions and Credits tab.
There are others that will disagree with this, and it doesn't matter to me.
