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Generally, not, unless the insurance proceeds exceed the basis (generally the cost) of the property. If the insurance proceeds exceed the basis of the property, and you do not rebuild, the excess is capital gain.
Sorry, that was not quite correct.
If the insurance proceeds are less than the amount of loss (reduction of fair market value), then the casualty loss is the lesser of the adjusted basis of the property and the difference. If not, there is no casualty loss.
If you do not rebuild, the adjusted basis of the property is reduced by the insurance proceeds. If that basis would go negative, you have a casualty gain. (Note that you can have both a casualty loss and a casualty gain.)
You net the casualty gain and casualty loss on different components of the property. If the net is a a loss, you can deduct it. If it is a gain, it is a capital gain.