We currently have about 50K in equity on our forever home. 

Though I guess if they didn't know where the ball park was, they would forever be failing to find it!

Short term rentals are a fairly new animal to most insurance companies (I have no idea why since they've been around forever) and I agree that most vacation rentals at the beach or mountain cabins, etc. the companies running those do have commercial policies and even I have a commercial policy but not because I have to rather because I get better coverage at a cheaper rate.

I could go on forever, but I'll let others add to what I'm saying here.

Be prompt in getting a few bids to remove it(unless you have PM that can accomplish for you), get it gone, write-off the expense as your consolation, and it is done forever.

However, if you are shopping for your forever home it might make more sense to rent here for a while/live in a future rental until you can get a feel for which part of town you want to stay in long term. 

Remember anything you say or do can be used against you in a court of law and the internet is forever.  

At least it took forever and you were charged plenty.

You have no obligation  to hold a 1031 replacement property as investment forever. 

Obviously you can't eat that cost for forever, but I'd def work with her as much as possible.