Cover your bases for starts and then get legal advice. 

If their policy ever lapses or is canceled, they are automatically enrolled in my master policy and covered. 

First, most investors and owners of real estate related businesses are in one or more of the following situations1- they’re unable to duplicate their expertise that drives the ROI and they are at their personal max capacity as to time2- they’re obtaining high ROI by use of excessive leverage 3 - they’re obtaining high ROI by taking excessive risk4- they hit correct timing in the correct market, and this is not necessarily repeatable with any probabilityIn order for an investment or business to scale, we need the ROI (on a risk adjusted basis) to be sufficient to cover a PREMIUM risk adjusted return to passive investors; all expenses of managing the assets and the business, and a significant return to the “sponsor” providing compensation to him making the work, risk and time worth while. 

I think #2 covers 90% of the work, BUT there are people whose debts are out of line with their income.

I guess that's part of my question, if you could have the security deposit cover that and people's experiences so I could better prepare myself. 

Two things not covered so far:1) If a buyer challenges a seller-financed transaction, the Dodd-Frank penalty is that the lender must make the buyer whole.

I also want to clarify that I do still keep a decent amount of cash - just not enough to cover every single property roof at the same time if that ever happened for some reason. 

Umbrella Policies are good, but they are not an asset protection tool, they only cover litigation/damages after you’re already in litigation or found personally liable.

@Mohit Gupta  depending on number of occupants your regular insurance can cover it, read the policy, ours covers two roomers. 

Since you only have 2 full time and two part time staff, who covers their vacations and sick time?