When facing large losses, you best believe that insurance companies lawyers are going to look for every reason possible to deny the claim and this could potentially be something that could cause it to be denied.

I've had 2 dead bodies, 1 one which nobody would claim the body. 

The former tenant thinks this is unfair and is threatening small claims court.

If you are using this property as a rental for tax purposes, you should ALWAYS claim depreciation, because whether or not you claim it on your taxes, it WILL be recaptured on the sale of the property.Hopefully a tax professional will confirm my understanding.

I am not sure if the insurance will collect the amount of the claim under the subrogation process.

$500 is going to be small claims court.

It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estateUnderstand you can not eliminate all risk, only mitigate it.

She claimed to have filed a law suit against the Real Estate agents stating that she was coarsed into selling her property and other charges including harassment.

You can always back off if the tenant objects and claims your increase is illegal.

I believe your claim that the property is overpriced and run down, but market value is determined by what a buyer is willing to pay.