If you hire a contractor who is bonded and insured through a policy issued by a local insurance agency, what is covered?.....

I have fair rental value coverage in my insurance policy, but I don't know if it will apply since the tree didn't fall on a covered structure.  

$25K is not enough, in my opinion, to insure a solid reserve fund.

Purchase price: $125,000 (assuming offer is accepted)Down payment: $25,000 (20%)Financing: 30 yr @ 5% = $540 /moInitial rehab: $5,000Closing cost: $2,0001st yr Insurance: $1440Taxes: $120 /moInsurance: $120 /moVacancy: $150 /mo (8%)Maint/Cap-Ex: $270 /mo (15%)TOTAL EXPENSES: $1200Rent: $450 /unitTOTAL INCOME: $1800Cashflow: $600 /moCash on Cash: 21.5%Here is a link to the listing if it may provide more insight:Quadplex ListingThe unit is located on a decent street in a very small town (<10,000).

I would additionally have enough to cover 6 months of mortgage payments (including tax and insurance).   

Additionally since insurance costs are born by all policy holders is it fare to allow any person to qualify for insurance when the likely hood is that their home will be repeatedly damaged or destroyed in the future.

Also I was able to get homeowners insurance to cover the outside of my section of the building in case something happens. 

But I keep hearing people telling me not to rent out a property with a swimming pool because of insurance/liability issues.If I intend to insure it fully, am I still gonna run into problems?

He recommends to purchase more liability insurance."

I would like to keep my stable day job for now, until I'm able to transition fully into the industry.