Proceeds from insurance, such as from hail or fire coverage, are includible in gross income in the year actually or constructively received. In effect, destruction or damage to crops and receipt of insurance proceeds are treated as a "sale" of the crop.
"Handling Prevented Planting Payments,"
Agricultural Law Digest: Vol. 10
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol10/iss24/1