I would ask the insurance company for more documentation on the reasoning. 

Having the property on your tax returns will help to wipe the mortgage expense with proposed rental income, making it easier to qualify for your next primary residence purchase.

You will get way better loan terms than you would on a Cash out Refi as a partnership entity with no RE experience.This is all very theoretical, can you share the actual numbers so we can help you more?

I have more.

Guessing the have a strong lobby...in more ways than one.

In the 2024 insurance market, CA is hard to place, so even though you could force them onto a single policy, it may be more economical to keep them separate.I'll send you a note with the carriers who can do this for you.

Even if you only averaged 2.8% appreciation annually, which if you've had it 20 years I have no clue how that's true given prices have well more than doubled in that time, youre skipping over the fact that you have been benefiting from that appreciation on the ENTIRE house, not just the % you paid for.  

Glad to help you connect with others in the area as well

Or were you using that more for an example?

You'll definitely need more time to get things processed.