My belief is that if you can find a good enough deal, you can make it work - even with limited track record.

Mitch already touched on it but this is a good example of "correlation does not equal causation".

We have an insurance policy on the rental house (through State Farm), that includes a personal liability section, which is essentially equal to our current net worth.Given that a tenant could sue for more than this if an accident occurred, we are thinking about adding either LLC or an umbrella policy (or both) as extra protection.Any advice on which way to go, and if LLC, any recommendations for a law firm or company the Indianapolis area?

Please note that contrary to common belief a lender can NOT prohibit a transfer, they could only declare such transfer a item that allows them to accelerate the note.Up until now, very few notes have been “called” due when title has transferred.  

Buying with an LLC is a great way to safeguard yourself and your property, highly recommended, however, if you’re purchasing through an LLC that was not formed specifically for the purposes of acquiring your investment property, ensure you own more than 50% as LLCs can get complicated with multiple equal shareholders.

If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.6.

All things being equal, I would accept these applicants, but I would require them to pay a deposit equal to two months of rent.

In the long term  expect RE to appreciate at a rate equal or greater than CPI.  

Or maybe the units aren't equal and one rents for $2800 covering most of the cost of living there. 

Keep abreast of the latest fraud techniques and adjust your criteria accordingly.Educate Your Team: Ensure that everyone involved in the leasing process understands the signs of application fraud and knows how to react when they suspect fraudulent activity.Legal ConsiderationsWhile it's important to be vigilant against fraud, it's equally crucial to conduct all screenings within the bounds of the law.