For anyone utilizing arbitrage in San Diego..

What are your homeowners doing for insurance? I am arbitraging an older property that Proper would not cover. I found C-Biz, one of the only providers that would write a policy for an arbitrage scenario. My homeowner informed his carrier I would be subleasing and his agent told him he would not be covered if the company found out he was subleasing. C-Biz is also writing a policy for him, but it is double the cost his traditional policy (which I understand is to be expected) and he'd like me to pay the difference. 

I have asked this question in other forums but I can't seem to get a straight answer. Some of the agents I spoke to advised the homeowner would simply stick with a landlord policy since his contract with me is technically long-term. Other agents advised regardless of who is running the business out of the home, this changes the scenario to commercial, which requires a different type of policy. 

In terms of the arbitrage model, homeowners having to pay double in insurance is significant downside, so how are other people getting along? Are homeowners keeping landlord policies only and taking a chance? Has this come up for anyone else?

Any and all feedback is welcome! Thank you!