We all need to make sure we have the appropriate coverage, in case the worst happens.

I think that's a solid plan- sort of a middle ground between the risk of leveraging too much and not enough.

The only reason I can think of, is that they have some sort of deal with this middleman, and stand out to make a commission out of this.

The worst thing you can do as a landlord is be hated where people feel you have personally and negatively impacted them.

I assume that even though there are a few steps of contract relationship (me to designer to them and maybe to a sub beyond that), that I still would own liability in any sort of event. 

They wondered why these sorts of incidents simply wouldn't be claimed under the general liability coverage of $1M.

@Nathan Frost- correct -the " interest " only payment  is often made  monthly along with the  monthly taxes and insurance so the only thing missing from this  sort of payment  would be the  principal  amount that  would be  required  on a normal amortizing loan  (  which isnt a huge  amount  ) 

Be sure to advertise exactly what SORT of charging your property offers as there are like a dozen possibilities.Everything past that is speed of charge or dealing with billing infrastructure. 

I have researched the business and I have contacts and connections like family friends who are contractors/ have done some sort of real estate fix and flip.

You are opening up yourself for the worst deals with what you said.