How do you investor feel safe knowing that there isn't a sink hole developing, or some other major catastrophic event has already occurred on the building or land. 

On the flipside, something catastrophic could go wrong the week of exams.

The insurance protects you from catastrophic loss, but is it worth it?  

Barring catastrophe, it will always be there.I also have stocks, 401Ks, and IRAs, which I call Funny Money.  

With profit of $12,000, it's usually enough to cover anything catastrophic that insurance won't cover and that's not planned for in your cap-x/maintenance budget (higher vacancies, eviction, destroyed unit, large repair). 

No, you are right, you need to assess your risk appetite.I personally have hard money loans and crypto, but it is a small part of my asset and while losing them will set me back, it won't be a catastrophic change in my lifestyle.

Hopefully it won't be catastrophic.

I am active military, and I assume that may have had something to do with it...not because I’m American, but defaulting on the home would mean catastrophe for my career and I’m certain they know that.

I don't like making claims for small stuff because I want to keep my insurance premiums across multiple properties low and just use this for a catastrophic event.If it were me I would use any of their deposit and pay the difference out of pocket and write this off to the cost of doing business.

The inspection uncovered potentially catastrophic issues.