Then something on title, structural or environmental could pop up on a deal and literally destroy it.  

I believe I already have it so all I do is keep it rather than destroy it.I once borrowed over a quarter million dollars from a BP member with no deed of trust, no real security, only a promissory note.

If the dwelling unit or common area are damaged or destroyed by fire or casualty to an extent that the dwelling unit is in material noncompliance with the rental agreement or with Section 5-12-070, the tenant may: (1) Immediately vacate the premises and notify the landlord in writing within 14 days thereafter of the tenant's intention to terminate the rental agreement, in which case the rental agreement terminates as of the date of the fire or casualty; or (2) If continued occupancy is lawful, vacate any part of the dwelling unit rendered unusable by the fire or casualty, in which case the tenant's liability for rent is reduced in proportion to the reduction in the fair rental value of the dwelling unit; or (3) If the tenant desires to continue the tenancy, and if the landlord has promised or begun work to repair the damage or destruction but fails to carry out the work to restore the dwelling unit or common area diligently and within a reasonable time, notify the landlord in writing within 14 days after the tenant becomes aware that the work is not being carried out diligently or within a reasonable time of the tenant's intention to terminate the rental agreement, in which case the rental agreement terminates as of the date of the fire or casualty.

After Sandy, NY State and FEMA instituted a program that allowed homeowners to receive pre-storm value for their destroyed homes.

I made the mistake of not Selling some of my Rentals in South Tampa, in 2008 when the Government supported the Banks and destroyed the Middle Class and the Builders.

Yea, it can happen but in all my years I´ve never heard anyone say every tenant destroys the property.

A main concern is if the town gets destroyed by a storm yet somehow the houses are still rentable and you cannot get an insurance claim in on the house itself, is there any form of insurance that can cover the loss of rental income due to people not wanting to rent the house because the rest of the town is destroyed?

Way to go, Fed, you have destroyed a booming economy.

If you took the time to analyze all the possible future outcomes for buying a new REI today, (economy, inflation, local appreciation, local job market, uncertainty on repairs/maintenance/capital improvements, uncertain how long the A/C will last, uncertain how long the tenants stay, uncertain vacancy period, uncertain tenant destroys your property).....then map it all out....I only invest when the reward greatly outweighs the risk (of losing/failure).

Many renters come to us with crushed lives, lost jobs, broken marriages, health issues and the resultant destroyed credit.