You might offer to pay the deductible.

High premises liability, low deductible your last 2 years of ownership at a min + lost rentsYou may want to consider a rental policy for entire property and a renters policy to cover your belongings for your side.

Should we lower our standards more? 

I have 300+ rentals and in my experience, over 80% of tenants with multi-year leases fail to fulfill them.Your biggest mistake is that you've set standards and now you're already trying to circumvent them.

If insurance covers everything but the deductible and the tenants are otherwise good, you may offer to only hold them responsible for half the deductible.

coinsurance penalty , or how the  $2000 or 2% on your deductible is factored at the claim.

That said, at the risk of beating a dead horse, it seems to be the general consensus that the 20% QBI deduction will apply to most landlords, as we've already discussed on a few other threads.My opinion is to issue 1099s wherever possible in the hopes it further solidifies the "trade or business" stamp.Thoughts??

This means you would get much larger appreciation on your cash, much larger tax deductions and you would have 4 tenants buying you 800K in RE instead of 1 tenant paying you back for your 200K investment. 

Double standard?

With some discomfort (lowering the retirement income deductions) I can pay off an ARM loan in 10 years, so I am not much concerned of ARM payment ballooning to 8.75% and me getting foreclosed :) I am currently preapproved for the loan products I mentioned above by a big national bank.Let me know if you need any other info.Cheers,John