People got crushed, as other mentioned, because they were over leveraged, had short term hard money loans on too many properties and couldnt refinance out, lost their job, went bankrupt, or had some other catastrophic events in their lives when the real estate market crashed.

If banks were smart they would also have options on their mortgages / bonds just like investors have calls or outs if they are heavily invested in a stock to avoid a catastrophe and banks could do this since they charge you 5%+ per loan while deposits typically make less than 1%.

It seems crazy, but I feel like the best option is file the claim, risk losing coverage but get this issue covered, then find some catastrophic/liability plan only and ride it out?  

This gives some wiggle room for any catastrophes in the market.  

Here's very broadly what I'm thinking:Gross Monthly Cash Flow - $10,000After Tax Cash Flow - $8,500Housing Allowance - $2,000Health Insurance - $1,000Regular Expenses - $3,000Cushion for personal emergencies, rental catastrophes or reinvestment - $2,500So far, our 13 units brings us about 1/3 of the way there.  

Who is responsible for this catastrophe? 

Jude Children’s Research Hospital announces largest strategic expansion in its history targeting pediatric catastrophic diseases globally Six-year plan to invest $11.5 billion with donor support to accelerate research and treatment worldwide and FedEx continues to invest in Memphis with addition of their Logistics Opens Global Headquarters in Downtown Memphis.

But it is also exactly the kind of absurd story that defines our pandemic; a global catastrophe sparked by something as trivial as a strong gust of wind, sparking an abundance of laughter at the surreal stupidity of the situation.

2) Will the government recognize this potentially catastrophic risk and step in to help subsidize these areas?

These insurance claims that you filed are not of a catastrophic nature.