The tenants are given a welcome packet stating the rules for issues caused by tenant negligence, so they are very aware of the upcoming cost.How should I setup reimbursement?

The difference in interest rates is negligible.

We are still not terribly litigious up here - unless it is significantly grievous action and you are being pursued for negligence, in which case, the corporate veil will offer little protection.

Now you have just armed someone who has no qualms about taking innocent lives because you negligently carried a weapon you had no intentions of ever using.

Therefore requiring your tenant's to have renter's insurance gives you another layer of protection, and another avenue pursue in the event the tenants causes damage or negligence.  

While it is quote possible and likely that there was negligence on the part of BP, the reports do suggest that there were a variety of equipment failures and the equipment was supplied by leading industry suppliers.

I'm guessing appreciation won't be big, but as a hassle-free toe-dipper investment, the risk seems negligible given the small amount invested.

  $10,000 of Misc Expense on a $1,000,000 or $10,000,000 of transactions is negligible and something that can be skipped over. 

I think “still works” is relative to how effectively its working vs it just powering on and/or performing its general functions - if its not effective or wasting energy bc of negligence or age its as good as broken now. its just “performing” until is break - something harder to ascertain from just inspection.

My insurance covered up to 1 million and said if he won I would be responsible for any amount above the initial million.This was somewhat of a frivolous case as this guy fell because of his own stupidty and nothing pertaining any negligance on my part or properties part.We went to mediation and he was found at fault 60% and I was found at fault 40% he was awarded 8k but based on him being liable for 60% he only received 40% of the 8k payout.Although this case is different then yours, in other ways it is similar.