I hate paying for all this insurance but don't want to be hit early in my real estate career with a large lawsuit. 

If you're in a state where lawsuits are common, I would be careful.

You want to scour through and see if you can find anything...divorce filings, new loans, leins, Law Suits.

I don't feel comfortable having someone rent the unit without insurance and have someone fall or something and file a law suite.

Is filing an ejectment lawsuit something that can be done without a lawyer?

@Arnold Finkelstein, if he files for a later redemption lawsuit, you can answer and ask that your earlier legal fees be added to the price tag. 

More importantly, we are looking for an investment property that we can use to offset our mortgage payments and help build equity faster.We have been exploring the ideal of finding a property with an ADU (essentially a detached mother-in-law suite) that we could rent out to a grad student or small family.

. $95/night for 1 bed/ 1/bath 600sf mother-in-law suite. 2021 is a much different story.

I don't know what the ultimate outcome of that lawsuit was, but don't end up like that homeowner.

You can also defend lawsuits brought against you, but you cannot bring suits or raise counter/cross claims.