This will come down to the state landlord regulations and proof in evidence.

These folks are on your side and will got to bat for you with the insurance company.The LM adjuster is on LMs side and will try to reduce the payout as much as possible - and you're already seeing evidence of that.

There is supposedly lots of evidence to prove they didn't take any action to close, took several people through the property under false pretenses, etc.

You have zero evidence they're capable of paying on their own.

Evidently it was commonly used in firebricks, chimney flue, and mortar on chimneys.

A Judge likes evidence.  

An issuer will be presumed to have a reasonable belief that all of the purchasers of its securities in this state are purchasing for investment pursuant to Section 58-13C-202N(3)(a) if:(1) the issuer, prior to a sale of its securities to a purchaser, obtains from that purchaser a signed statement that the purchaser is acquiring the securities for its own account and does not intend to resell the securities within twelve months of the purchase date;(2) the issuer maintains a record of all statements obtained pursuant to Paragraph (1) of this subsection;(3) written disclosure is provided to each purchaser prior to sale that the securities have not been registered under the New Mexico Uniform Securities Act and cannot be resold unless the securities are so registered or can qualify for an exemption from registration; and(4) a legend is placed on the certificate or other document that evidences the security stating that the securities have not been registered under the New Mexico Uniform Securities Act and cannot be resold unless the securities are so registered or can qualify for an exemption from registration.D.

There's no better evidence like personal experience, eh?

Because I have no strong physical evidence that would indicate he knew about the problem.

Maybe you could use the term “aggression,” combined with something like “disorderly”, then DOCUMENT everything the tenant does and maybe eventually, with evidence of multiple instances of being irrational in an aggressive or disorderly way, it turns into something that a judge might find more palatable.