Suddenly, my Insurance company (who already binded my policy on closing) is starting to at concerned and is asking A LOT of question such as who will manage the property?

If you finance the property you must purchase flood insurance, rarely or not doesn't matter if it's in the zone. 

You need to talk to your insurance agent about finding the right liability policy and umbrella policy.

It will make your property more competitive and if your tenants do start a fire then the rental insurance should hopefully cover it.

Can I then get it insured?

Location: IndianapolisPurchase price: $125kClosing: $1,200Reno: $78kProjected Reno time: 3 monthsHolding costs: insurance $350 (3 months), taxes ($150), utilities ($500)All in costs on projected timeline: $205,200ARV: $260kIf I BRRRR:Rent: $1,500PM: $150New Assessed value for tax: $450/month (2%)Please help!

They need to carry basic hazard insurance while the builder carries the liability.  

Another option is to ask your insurance company what the replacement costs would be as they have all that data as well and use it for underwriting policies. 

No advice on who to choose, but for the applicant who had a few late payments, maybe get 12 checks in advance all post dated for due date or have auto payment from their bank to yours every due date

Do I need to purchase title insurance?