The big "McDonald's hot coffee" awards you hear about are extremely rare and contain extra punitive damages above and beyond the regular award due to long-term, sustained negligence from the losing party.One other thought to help put your mind at ease: I personally know over 100 real estate investors, and none of them have been sued for more than $5,000. 

Sometimes tenants are negligent and if they're not paying the water they don't care about leaking faucets or running toilets.I'd just replace the whole toilet.

It could have blown open again or they could have been negligent...

My agent and carrier were negligent, they let me under insure my house and didn't explain the consequences to me." 

The tax savings from a mortgage on your personal home are negligible unless you have a large mortgage (700K, 800K etc).

It was always pictures of damages with emails asking for funds for repair.USREEB has also send me 13 emails over these few months wanting me to sign a contract stating that I will not report them to Better Business Bureau and give up my right to legal litigation.The negligence of USREEB have costs me over $17,500.  

Since the fire was due to negligence by the tenant what is their responsibility to pay for damages?

State laws dictate that security deposits must be returned, along with a statement of deductions within a set timeframe. usually this is 30 days, but sometimes can be 60. failure to return the deposit or a statement of deductions "usually" means the tenant is owed the whole deposit, due to your negligence.

This larceny (not a robbery unless she was home at the time of the break in) was not because of your negligence as the landlord. 

The S Corp couple I mentioned was sued personally for negligence.