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.