It's easy to obtain, costs very little, and doesn't require extra, on-going effort to maintain. 

Pro-rate the rent and save yourself a lot of grief from an issue you would surely lose.If they had purchased renters insurance with loss of use/additional living expenses this could be a covered loss for them.  

Vacancy/turnover is very expensive!

Its hard to understand based on your post what this fee is for, but perhaps the structure does not entirely conform to zoning requirements as a single family home or something of that nature. 2.

When we owned SF rentals they required $500K of liability on each rent property.I never had to have a general liability policy. 

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Here’s how you can calculate the income requirement:Monthly Rent: $1,680Income Requirement Calculation:Multiply the monthly rent by 3 to find the minimum monthly income required:1,680×3=5,040Therefore, a tenant should ideally have a monthly income of at least $5,040 to comfortably afford a rent of $1,680 per month in the DFW area.

There are three main requirements for REPS: 1) 750 hour rule 2) Greater than half of professional time rule3) Material participationHere’s a great article that walks through the necessities for your spouse to obtain REPS status.Do you have questions on the ways to benefit from a cost segregation study without personally obtaining REPS status?

@Meghan McCallum - Are you required to pay a city tax on Airbnb in Chicago? 

The housing authority's specific inspection requirements must be completed by the property, which occasionally calls for more renovations or repairs.