Now, I'm imaging a scenario when every one of these tenants move out that I'll be paying their entire security deposit + interest even if there are damages beyond normal wear and tear. 

The agreement is that your tenant will pay for any damages they caused.

If they cause an issue about it.

Tenant waives any claims against the Landlord for loss, damage, or theft of personal property, regardless of the cause.

If they failed to pay the bill and utilities are shut off, they are responsible for any damages caused.

Destroying the house calling board of health for tenant damages and literally every little thing creates huge expenses.

You'd be surprised how much damage they could do.

Appears the guests may have left the faucet "on" when the pipes were frozen and when no water came out, forgot to turn it "off".What may have caused the overflow of the sink is maybe the drain lines were also frozen?

The lawsuit asserts causes of action including breach of contract, unjust enrichment, conversion, fraud, and civil conspiracy, with the plaintiffs seeking $56 million in damages and injunctive relief.

I would have contacted the locksmith tech to get additional details before assuming it was tenant damage.