The recognition and measurement of casualty losses, contingent losses, and certain expenses are not impacted by having insurance coverage. While potential recoveries under an insurance contract depend on the occurrence of events under the policy, the recognition of a receivable for future insurance recoveries is separate from the accounting recognition and measurement for the insurable event. Recognition of a receivable for insurance is triggered by the recognition of losses for the insurance event. Potential insurance recoveries exceeding recognized losses are evaluated as gain contingencies, and are precluded from recognition until the gain is either realized or realizable.
Grant Thornton’s “Accounting considerations for insurance recoveries” discusses the accounting for insurable events as well as the accounting for insurance recoveries, complete with illustrative examples.