LOL  You are suffering from HGTV disease.In all of my SF rent properties, we found what was popular in the neighborhoods where I was buying and did the same finishes over and over.In our apartments, we do the exact same upgrade.

The best way to protect yourself is to thoroughly check tenants before they move in and thoroughly check tenants that are already in a property you are planning on purchasing.

However, if they have lived in the property over 12 months, they are going to be protected under the new law (AB1482) and you'll need "just cause" to evict them (unless there's an exemption you qualify under). 

How can I protect myself?

Tenant is advised to carry Tenant’s own insurance (renter’s insurance) to protect Tenant from any such loss or damage.

If that's the case, you can't do any renovations until you have it professionally deleaded or it would be flagged for Unauthorized Deleading and you can get fined and the property would never be able to get a Lead Certificate, only a letter of Environmental Protection that states you did illegal work, got caught, then had to pay a professional to clean up the mess.

(3) If Option B happens and I'm not able to come up with the full closing costs myself, would I be protected by the mortgage contingency, since I technically wasn't able to secure a loan for the full $703,500?

He went on to say that tenant B was suffering from mental health issues exacerbated by the COVID shutdowns. 

If asset protection is what you are looking for then get an umbrella insurance policy. 

There are many additional conditions and clauses you need to protect yourself that are not in it.