Although during the termite inspection they found old trails in the garage with minor damage.

They usually come without the roof damage ;) 

There is no doubt in my mind that rainwater intrusion is already causing damage and fungus growth in the attic as a result.The code violations are going to require moving the laundry area.

For instance, I should never need to replace the studs in my wall if they are protected from damage.  

Or what if he trash the house or does significant damage to the property?

If they are friends, they are friends PERIOD.I would do whatever is within reason to help my friends out, even if it costs me a months rent while I find a new renter.Assuming they haven't damaged the property give them the security deposit back and move on to the next renter... preferably someone you are not close with...

Coverage varies based on size, age and location, but generally 50-80% of damages.

Is there any recourse if they damage my property and leave the country?

I usually ask to see if they can send some over, especially any damages. 

Then they are shocked that the damage they did to the house combined with the calls to health department resulted in red tagging the house.