The insurance company has reported that payment type on the wrong form. A 1099-NEC is to report non-employee compensation. That is payment for services/work.
Further, insurance reimbursements for losses are not normally reported on an income form at all, as they are not treated as income. You would not normally report the payment on you tax return unless claiming the loss as an itemized deduction and then you would reduce that deduction by the amount of your reimbursement.
You should contact the insurance company to find out why they issued a 1099-NEC and if applicable have them issue a corrected form to delete that income report.
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