I also like to use incidental insurance as an additional layer such as Waivo to cover items.

you're "out of pocket" those costs, plus maybe a month of vacancy.my point - you're basically always out of pocket on a rental. sometimes the rent more than covers everything, other times it doesn't. 

Hey @Joseph Chacko vellukunnel,I think @William Kwong covered some great points especially with the financing aspect.

I wanted to cover my why and what first to give a good picture of where I'm at current state, with a background and what I'm looking for below.My why: I recently got married and moved from San Diego to Scottsdale this year.

Typically I’m seeing higher appreciation than cash flow but it can be hard to tap into that equity if rents won’t cover the new cost of the refinance.

Our property has cash flow and according to the many bigger pockets podcasts I’ve listened to you shouldn’t just pocket all cash flow but set aside a percentage to cover reserves, CAPEX, vacancies etc.

Does renters insurance cover something like this?  

I have high revenue from my rentals and have diversified other investments that cover my lifestyle.  

My initial guess would be look at 1 bed 1 bath rentals in the area but is that the best way to estimate?

As I mentioned above, the risk of being sued, found guilty, and fined more than your insurance will cover is almost non-existent.