I appreciate all of the detail but what information was provided to the agent that wrote the policy?  

@Zach Howard there is no agreed upon Classification in the 1-4 unit market.We've done our best to logically create a system for our market, mostly based upon relative sale prices, but also using crime rates, rents, occupant income and a few other variables. 

On a per-owner basis the policies will change for occupants over the age of 18. 

Make sure to mention that this violates the quiet hours policy and could impact their lease status.

I am aware that since I’m renting one unit out I need a landlord policy, but can my policy be HO3 or does it have to be DP1? 

In my opinion disclosure is always the best policy in both scenarios. 

The landlord should be named on the tenant's insurance policy for additional protection and to assist with tracking compliance.

Just a few hours of preparation could have saved you many hours of effort, a lot of worry, and thousands in lost income.

I use strict / flexible cancellation policy.

Supplement this far simpler entity approach by ensuring you have appropriate types and levels of insurance, you operate your business in a manner in which your conduct is not considered an exclusion in your policy, you work with licensed and insured vendors, you execute contracts with indemnification clauses with these same vendors/ require additional insured status &  maintain appropriate licensing and permits.