Technically it is owner occupied, but I wouldn't want to try and defend that in court.

@Tyler SeeverShort Answer: Deduct whatever you are willing to defend in small claims court. 

In other words, one day of rent is probably not worth a worst-case scenario of having to defend yourself in small claims court. 

If a lawyer sued you under the LLC, and your policy is under your personal name, the policy most likely will not respond/defend you in the suit.There should not be any price difference when changing the name on the policy for your personal name to a LLC. 

@Robert StoverIt depends on the potential title issues and whether the defendants would actively contest the quiet title action.

Agreed, neither you or your attorney can actually do anything to defend the suit....that’s on the lender.One the other issues....if someone moves and doesn’t change their official,address with the bank or property appraiser office....there is no defense to not being served.....hiding from service doesn’t stop the process.As for the escrow thing, yeah irrelevant and not grounds for much of anything.Attorneys, especially when filing a suit they think has little merit, will throw out a bunch of allegations....they probably know they’ll lose but they’re getting paid to do it, right?

If you have homeowner's insurance and someone sues you then the insurance company pays a lawyer to defend you.

We currently rent to 2 other friends, one has been there 3 years, the other moved in June 1st, and is the senior minister at our church.We are on good terms with all of them.Will this practice bite us in the rear at some point?

Yes, the risk is huge, you have to understand what's going on, and be able to defend your position. 

Or, defend it against a desperate borrower.