I don't see liability caps as the sensible approach here.

Liability caps are used in specific instances where losses might otherwise prove catastrophic to the insurer. The two areas which come immediately to mind (and no, I'm not versed in the industry though I did in fact study it, lightly, in school), are major disaster property insurance (flood, hurricane, earthquake), and liability caps (general liability, medical malpractice). Both are specific to how insurance works, at least in theory.

The most usual basis of insurance is risk pooling, largely for uncorrelated and individual risks. Premiums covering house fires, automobile property and liability damage, workplace injury, or shipping, tend to cover (from the perspective of the insurer) relative small claims which tend to occur predictably and independently.

Where caps are imposed, either predictability or correlation tend to be less manageable. The insurance sector has long lobbied against tort policies favouring claimants, and argued that tort liability claims have been skyrocketing. I studied the tort liability crisis of the 1980s in particular, and have kept an eye on this issue in the decades since. In truth, the 1980s crisis owed far more to the inflation surge, and remission, of the late 1970s and early 1980s. With inflation came higher (nominal) returns on investment returns, which is where insurance companies invest premium payments pending payouts. While the industry was screaming "out of control court judgements", the reality seemed far more to be one of getting whipsawed by the (pre-inflation) pricing of policies, the (high investment returns) period of low premium rates (subsidised in effect by investment returns), and under the Volker inflation controls and tight-money policies, falling investment returns whilst claims increased, largely in step with inflation. Caps on payments would in this case address the inflation/investment risk side of the business.

Correlated claims is the other situation.

Individual risks --- automobile crashes, house fires, accidents, structural collapses --- tend to be independent of one another. In major widespread events, a large number of correlated claims occur, and can stress the capabilities of even large insurers or the industry as a whole. Floods, earthquakes, hurricanes, major wildfires, tsunamis, ice storms, and drought can affect large areas, ranging from major portions of a single city to regional or continental regions. Though the events are distributed across time, when they occur, they occur everywhere at once, at least within the affected region. Payouts in this case require limitation.

Virtually all insurance policies include exclusions for acts of war or civil disturbance. As with natural disaster, these occur in unpredictable and widespread manners, and are poorly handled by commercial insurance.

Depending on the underlying mechanism for the Surfside building collapse, there might or might not be correlated risks.

If the principle cause is in fact climate-induced geological undermining which could affect large low-lying coastal regions, then yes, it's possible that those zones could simply become uninsurable.

If the principle cause is poor building methods or design, then the risks would be limited to, say, construction by the contractors or designs by the architects in question.

If the principle cause is poor maintenance and inspection processes, then the risks would apply to the specific geopolitical domains affected by those inspections. Surfside, Miami-Dade County, or the State of Florida as a whole might be affected. Here it's likely that the insurance industry, through property owners and residents / tenants of such buildings would be able to impose reforms to the inspection and remediation processes, which gets at another mechanism of insurance itself: of actively managing and mitigating risks, not merely pooling them.