Form 4684 if this was an allowable disaster.

If they used that money to rebuild their home,  I think IRC 139 might apply here to exclude that income or Federal Disaster Tax Relief Act of 2023 might make that settlement excludable as well.

Probably did not require a 1099, but maybe required a lawyer to negotiate with the insurance company and they thought it might be a good idea since they got one too.  It is not income and you are just playing "trick the IRS computer" by trying to add it in just to subtract it out.  Was it business property or a disaster area?  Then 4684 should work.  Otherwise, I would attach an explanation to the return.  Others, of course, would play "trick the computer," increasing the likelihood of an audit by increasing the client's gross income. 

@BobKamman It has been widely reported that the only way to get settlement proceeds from an insurance company in Florida is to bring suit. 

AI gave this:

In 2020, 79% of homeowners insurance lawsuits nationwide were filed in Florida, even though the state only accounted for 9% of the nation's homeowners insurance claims. This indicates a disproportionately high number of lawsuits relative to the number of claims, suggesting that a significant portion of Florida homeowners may need to sue to get money from their insurance companies. 

About 90 percent of all insurance claims are settled without escalating into a court fight, said Charles Nyce, a professor of risk management and insurance at Florida State University’s College of Business.

https://www.pbs.org/newshour/nation/the-basics-of-navigating-the-insurance-claims-process-after-a-de...