Destruction of rental during swat invasion

[Niobe Burden Austere]

We had an incident recently where the tenants barricaded themselves in our rental townhome. We don’t have all the details because there’s still an open case of domestic violence against the husband.  These tenants were vetted and had outstanding, credit, jobs and references.  The husband was a veteran and we now find out an Iraqi combat veteran. 

So unfortunately in this incident, police (a swat team) fired 29 canisters of pepper spray into the home, breaking windows and destroying the inside, resulting in $40k in damages!  The husband destroyed nothing (appliances and fixtures fine and no holes caused by him in the walls).  Now, as landlords we find that neither the renters insurance (we were named as additional insured) nor the fire dwelling insurance covers costs to remediate and fix the property because there are “governmental action” exclusions in both policies resulting in denial of claims. The police department says they “went to the correct address so they are not liable”.  A lawyer we consulted indicated it was rare to be able to win a suit against a police department.   And lastly, it really doesn’t feel right to sue a combat veteran who had a ptsd incident!  It’s a very sad story but what is a landlord to do??  
Has anyone had experience with this?