I am not so sure on that

If you feel uncomfortable, you better check with an accountant to make sure. I think it depends on if you have personal injury or not, and it also depends on the money is paid in lieu of what.

the basic principle is that the settlement payment in settlement of a dispute will be analyzed the same as as settlement of a law suit. Therefore, money paid in replacement of a property might be treated as sale of the old property. if this is the case, then you might have a gain or a loss, depending on your basis, the value of your old car, that is.

that being said, if you don't report it, the chances of you being caught for not reporting is very slim, as IRS usually is not automatically notified for this type of payment.