Help! -- Water damage

Need your help!

I have a tenant reporting to me very early morning (5am) that large amount of water came out of toilet (not from the water tank, but the toilet) and make the entire first floor wet like flooding. I went there this morning and found out that that the carpet in the first floor was totally soaked. The tenant told me that the water is clear, and I didn't smell anything bad.

I am very curious, does the water really come out of the toilet? if yes, how come no smell at all?

I got a guy  come in, and he told me that I had to throw the carpet away and cut the dry walls too, because there might be germs from toilet water. Total cost could be over $5000. My fire insurance won't pay for this, because water damage is excluded.

Any suggestions?

Thanks in advance!