One thing you may want to consider is some sort of umbrella insurance - that might be a cheaper option, I'd price out bother.

In each category, note how much you are bothered or stressed on a 1 to 5 scale, with 1 = not bothered at all and 5 = stressed out: Pain Points Stress1 to 5 Pain Points Stress1 to 5 Unit turnover Exterior maintenance Advertising for available units Deferred capital expenditures Tenant screening rules Plumbing or electrical emergencies Tenant selection / discrimination rules Mortgage payments Documenting move-in conditions Bookkeeping and bill paying Documenting ongoing conditions Taxes and insurance premiums Dealing with tenant complaints Risk of late payments or non-payments Dealing with neighbor complaints Risk of property damage or vandalism Mold, termites and rodents Premises liability Interior maintenance Evicting tenants If your completed table has mostly 1s and 2s, then congratulations—you are a happy landlord!

FHA rates are actually lower than conventional right now even though there is a monthly mortgage insurance it’s not much in most cases.

Can name their brokerage in there also to go after insurance. 

Your insurance company likely has a no smoking clause on your policy and will back you up as you suspect this.

The insurance quote is $1476/year, deductible $2500, 300k liability. 

Most title companies will never give title insurance on properties bought at tax auctions.

I do not want to police the house; the nonprofit will make monthly/quarterly visits to insure their specific rules are being followed. 

@Shaheen AhmedI don't know the Ohio markets as well as I know Pennsylvania but (1) taxes can vary widely among counties, cities, municipalities, etc. and (2) the problem right now is that interest rates are so high (although taxes and insurance increasing certainly doesn't help.)What are you trying to accomplish?

Generally speaking solid insurance and a good umbrella policy will provide ample financial protection for most liabilities.