Sewer Backup - Furnace/H2O Heater Shot!

So here's what happened. I bought my rental 2 years ago and it had 2 year old furnace & water heater in a full basement. On May 21st SE Michigan had a ton of rain and the sewer system failed (don't know why...investigation is pending). So sewer water was gushing out of the floor drain until there was 24" of water! Stayed for 3 days then, like a toilet flushing, it drained. Waited a week and restarted both, they worked. 1 week later furnance wouldn't kick on to run the central and service man said both things must be replaced due to liability (since they run on gas). Quote was for $3071. Again, these are only 4 years old.

Sorry so long....but my insurance agent said water backup is not covered on my renters policy(didn't know this since it is covered on my home ins). The city mailed out claim forms so that they can file an ins. claim. That's ALL they are saying, they are not saying if and or when we could collect. But they did say this happened 4 years ago and the investigation is still going on and a class action lawsuit is pending.

So I need advice. What do I do? The only options I can think of are:

1. Replace both things. File a claim and hope to be reimbursed 4 years down the road.
2. File a lawsuit?
3. Wait for the water heater to break. Fix only what is broken on the furnace. Take the liability risk.

As a FYI, I paid to have the basement cleaned, sanitized, and repainted. My tenants lost everything in the basement (renters ins. wouldn't cover) and they too have to file a claim.

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