I feel that there is more damage to inside of the house that leaked sewage that I don't want to be held responsible for.- He has now given me the ultimatum  of either me and him finding a solution that is  "fair to both of us" or I move out.

It is easy to replace if a piece gets damaged and is much more durable than carpet.Keep things neutral and as you do repairs, look to see if there are items nearing the end of their life that need to be replaced and don't replace them with the cheapest item available. 

An umbrella policy is a good alternative so long as the damage doesn't go above the coverage amount, which is usually one million dollars.

Your state may or may not require you to mitigate damages by attempting to re-rent asap.

Next I would call a contractor to fix the cosmetic damage.

A frozen and cracked boiler, heat lines, and domestic water lines could set us back 5-10k depending on the severity of damage.   

It's only about $25,000 and a year to litigate it and you'd have to prove damages.

If the house is in great condition, ready to put on the market, then putting a short-term tenant in it is a lot of risk (of damage) for a little money. 

Termite Damaged Studs $1,000.00 Assume replace 20 EA studsRodent Extermination $150.00 QuotedNew Roof $5,750.00 Quoted - Partial re-decking at 10 sheetsNew Hot Water Heater $750.00 Assume $500 water heater and $250 installReplace Aluminum Electrical Wire $300.00 Assume 4 hours @ $75/HRTotal Rehab Budget $47,057.98 Contingency at 10% $4,705.80 Original Purchase Price $45,000.00 All In Cost with Original Purchase $96,763.78 ARV of Home $95,000.00 Based on ComparableAdditional Scope $11,792.98 New Purchase Price $33,207.02 All In Cost with New Purchase Price $84,970.80 Any advice?

But this is usually far more expensive than it's worth unless the patch replaces wood that's been heavily damaged and is no longer able to serve as a functional floor.