Whether or not you have an LLC, if you are found to be grossly negligent, it could be you that is writing the check for the judgement, and depending on the state, it can be up to four times actual damage.  

Possible damage that didn't get fixed because the arbitrager wasn't able to make a go and they just walked away.There are all sorts of possibilities for problems.

Also, in the rental agreement, it says:"HOLD HARMLESS AND INDEMNITY: OWNER of rental property shall not be liable forany damages and/or injury to TENANT and/or their guest(s), or their personal propertydue to TENANT’S acts, actions or neglect.

And depending on the state, gross negligence damages can include punitive damages for up to four times actual damages. 

Whether they are section 8 or market rate, a bad tenant can cause $10's of thousands of dollars of damage really quickly.  

Honestly, not what you want to hear, but take photos of the damage, send them an itemized invoice and tell them what they owe you.

I can only assume that our insurance company would not want to cover damages and such should something happen a house with tenants and a primary residence policy in place. but I haven't really gotten far into the weeds on the particulars of that. if you have gained any insight to that I would greatly appreciate the knowledge.

However, at some point you’ll come to know that when considering the time, aggravation, and damage to your reputation, it just wasn’t worth it.  

Plus a small cutting board and "hot plate" to avoid tenants damaging kitchen counters by chopping items or setting hot pots directly on them.Gail

I've been doing it since 2015 (including Section 8), and I've yet to have any damage done that exceeded the security deposit.