BRRR relies on leverage, so you need to be sure your rent won't drop below your debt service coverage. if you also have no equity, you're in a TIGHT spot with no movement. the real trouble with crashes isn't just that your business might take a wack, it's all the stuff that happens around you.

and are they quoting you for earthquake coverage? 

You must require that all tenants have adequate insurance coverage to protect third own homes.

I feel like this is too high but I feel like I may have not asked the right questions or I may have too much coverage. 

The downside is restrictive guidelines, a ton of paperwork, lack of flexibility.Commercial types of financing have pros that are flexibility in guidelines and structure you can do all sorts of stuff from substitution of collateral to partial lien releases on blanket commercial mortgages to cross collateralization and many others, less documentation than conventional financing products, use of debt coverage ratio (DCR) as opposed to Debt to income (DTI) and if you compare DCR to DTI the commercial lenders go up to 80% DTI since the reverse of 1.25x DCR is .80 or 80%.There are downsides to commercial financing and that is the convenants with in the mortgage note that can allow the lender to call the note so make sure to read all the definitions for what substantiates a "default," by the lender you'll be surprised by the definitions and language at times. 

Personally I don't go with less than $300,000 in liability coverage on any of my properties.

With a commercial loan from a bank or credit union here you'd be required to maintain a Minimum DSCR (Debt Service Coverage Ratio).Let's say the bank tells you that you must maintain a 1.30x DSCR, not uncommon for a small multifamily loan like this.

In most cases, I ask for around $100k in coverage.

I have a tenant moving in 45 days after my home closing and they said they still will need to cancel my coverage. 

They base value off comps but they probably still look at debt coverage service ratio