Without seeing any pictures, my guess is, if the fire department said it's not habitable, there's enough restoration work that needs to be done and filing a claim with your insurance company alone is not enough.

We had a small fire in the common area of our association that caused damage to all six units.Some owners decided to take advantage of the situation and add on minor renovations to the repairs.The insurance company (Erie Insurance) recommended that we hire (Perfection Restoration).

look @Melissa Mendoza  you saw a distress building and trying to see if there is an opportunity there.Considering the returns you are talking about, the size and cost of the project And the fact that you have no experience in structural/ restoration projects I think you need to fined another deal. 

It is already gutted so at best, I can do minimal restoration instead of high quality materials to save some money from loss (this was supposed to be a flip).

This fork is between continuing with my plan to start a windshield repair buisness (rock chips, scratches, long cracks, headlight restoration), or commit to a w2 income at a local Car lube shop.

If you have to restore with only certain materials or methods, that may increase the amount of coverage you will need.2.

I wonder if the investment people are putting into restoring the look of these fireplaces, wouldn't be better spent removing them.

We're looking to assume a military member's mortgage (we're military too so they should get VA eligibility restored...).

The answer might be too tear down the existing structure and the cost to do so versus existing use and structure with a restoration. 

Therefore a slow leak that could have been repaired easily just turned into expensive water damage, mold, restoration work, vacancy, etc. and good luck getting the tenant to pay for all that even if it is their fault and no matter what your lease says.