Both of those can be challenged and updated.3 - Get quotes from different insurance companies and brokers.That sounds like a waterfront rate, which is not unusual for a property backing up to a drainage area.

This was due to them waxing the floor and then running a steam mop over the surface, but there were only a few scratches because they kept it clean and took reasonably good care of things otherwise.

This is a blacktop surface parking lot and the sewer drain is concrete.

I often find gem's that look really ugly but really just need painting, carpet and surface work.  

I feel like I haven't even scratched the surface.

The other problem that surfaces, and perhaps first, is when the insurance company submits to the mortgage company a request for payment of the property coverage (even if they knew all along it was being rented and the coverage was a landlord policy). 

I was scratching at the surface.

Ok, another situation has surfaced from this incident.

That makes me think that their is some risk based modeling that goes beyond surface level "common sense".2nd pt.- The 2 appraisals were BOTH by approved FHA appraisers.

If I were you, I would just assume she is working there and do everything reasonable you can to mitigate the risks of exposure (ex. staying as far away as possible from her when she is home, disinfecting surfaces, etc.)