QB Issue Resolution:
It’s treated as a reimbursement for your loss. If the loss was recognized previously, then the insurance reimbursement should be added to the same type account as the loss was.
If your tools were in a fixed asset account, then your record of the loss may have a journal entry something like a Credit to tools for the cost of the tools lost, a Debit to Accumulated depreciation for any depreciation taken and the remainder (if any) to an Other income type of account named something like “Casualty loss”. In that case your deposit for the insurance reimbursement would go to the Casualty loss account.
If your tools were expensed as purchased, the the insurance payment might well be Other income. Think of it in this case as a reimbursement for expenses taken previously.
If a part of the insurance receipt was for a loss of income then that portion is income.
Resolution for Issue 'How to properly identify the correct type of account for insurance payout?' available: Yes (Solved).
Source: Intuit Community forum.
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