And they were covered for negligence.

I can't picture what the level of negligence or fraud was involved here.

A 3–5 gallon tank heater is cheap, tough, and works every timeThe small tanks:✔ Use very little power✔ Plug into standard 120v or small 240v✔ Cost $150–$250✔ Are easy to replace✔ Heat water fast✔ Require no fancy wiring✔ Don’t care about flow rate swingsEven though they keep water hot all day, the total kWh usage is tiny because the water mass is so small.For sporadic sink usage, the cost difference on your electric bill is negligible.5.

They face willful negligence lawsuits.So I doubt anyone is going to simply walk away from this.But I agree it could be an opportunity for a new investor.Except reputation is in tatters,and any new management will need to first surmount that marketing disaster.

Umbrella insurance which is an extension of your General Liability coverage will defend and cover any damages so long as the triggering event is not an exclusion in coverage (gross negligence (sometimes mere negligence), willful misconduct, fraud/misrepresentation, illegal use are common exclusions in property GL policies. 

The cost of interest you are saving on such a small amount of money is probably negligible. 

It also specifies that any repair necessitated by tenant negligence (like a shower handle broken from misuse) is the tenant's financial responsibility.

There are now so many resources and so many people to answer those questions, that you are officially negligent if you don't speak up and take advantage. ;-)That's a start.

There are now so many resources and so many people to answer those questions, that you are officially negligent if you don't speak up and take advantage. ;-)That's a start.

That means they’re expected to exercise reasonable care and diligence in managing the property.So if the damage is extreme and clearly developed over time, the owner could argue negligence — that a reasonable manager should have noticed warning signs (maintenance requests, odors, excessive utility usage, etc.) and acted sooner.It might be time to review your agreement with that management company...