You protect your assets by buying a landlord insurance policy, which comes with dwelling plus liability coverage. 

Plus by going with you, they won't have the benefit of an agent's errors and omissions insurance, the support of their brokerage, and the experience an agent has in protecting their clients from everything that can go wrong in real estate transactions.

House gets foreclosed on when a borrower is not paying its debt obligations - typically its mortgage.buying foreclosures is not for the faint of heart as you have no idea of the interior of these properties lastly while it can be beneficial also realize if there are a lot in an area those homes are the new comps when trying to sell so it lowers home values in an area 

My partner and I keep an excel spreadsheet of rent, our purchases, utilities, taxes, insurance, and money spent on contractors.

To calculate Net Profit, we need to deduct: Construction Financing, Investor Capital, Overhead, Insurance, Warranty, Etc.

- Why didn't the contractor's insurance cover this?

Explore the possibility of doing liability insurance instead, if you don't have much equity it may be your best, and much cheaper option.  

Insurance companies are always looking for MTR that are furnished like ours  never stays vacant more than a week.

You also need to consider that at a lower percentage of money down you will be paying a Mortgage Insurance Premium or MIP. 

There are fees associated with going to Real Estate school, obtaining your license, joining the board and MLS for your area, getting proper E&O insurance and so forth.