OP is referring to how the subject property was titled... which has no effect on how the lawsuit against his "partners" should be handled. 

I understand having adequate insurance is crucial to having protection from lawsuits and have been looking up the best way to go about this, what do you recommend in this situation?

Unfortunately, in my case he was asking for way too much cash and honestly that would have not guaranteed he was moving out.I ended up hiring a legal firm to file an "Unlawful Detainer" lawsuit.

After failing to find a suitable multi-family that had workable numbers we started looking at properties with guest house / "mother-in-law" suite potential and were pleasantly surprised with the options...especially with some vision.  

today i arranged an Asbestor inspector ($170  + $20 per sample) inspected the window side for signs of asbestos.The work is on hold and didnt make any progress as they tenant threaten the works about lawsuit and they are scared (i guess). 

Sounds like this person is just looking for a lawsuit.

I've searched the whole KC metro for listings with ADU, in-law suite, etc. etc. and come up with like 5 listings across the entire city.

I have family that is willing to purchase the home with cash, but not for the amount the lawsuit is filing for.

They're currently defendants in 2 class action lawsuits here in Hamilton County (disclosure:  I'm a plaintiff in one of them and they are suing me in an unrelated matter).Unfortunately, it's highly likely that you were set up for failure from the beginning. 

If your name is on the property and they are writing rent checks to you, then you would be names in a lawsuit and your personal home etc on the line.