Another consideration on top of what others have said is that you are also potentially going to have to argue with your insurance company, depending on how reputable your insurance company is and what your policy says, to even get that $500.

There are some policies (I forget which ones off the top of my head) that allow you to sue the tenant's insurance company for damage or loss arising from the tenant's misdeeds.

Feel free to post the policy details and I will be able to tell you immediately if you are high or low to what is currently being offered.

The policy is for a vacant property.

Talk to your insurance agent about what kind of policy you need them to have to cover damage arising from their actions.

Should I have an umbrella insurance policy?

I don't know the CMBS underwriting policies and standards or does each servicer have their own rules?

My Fire/Dwelling policy covers the rebuild cost of $193K, $2K in personal Property, and $100K liability (seperate $1M umbrella) for a yearly premium of $1750.

Or do I need to get two umbrella policies, one for each?

Any amounts demanded above that is strictly at the discretion of the lender: they may have an internal policy of 30% down or it may be based upon the risk you present as a mortgagor.