While rehabbing, you need vacant property coverage. 

If you get rental income the policy will include loss of rent coverage if damaged.

Mostly they care about debt service coverage ratio on the property and your personal ability to carry the property if it came down to it.

This is where your insurance coverage would kick in. 

I've also put in place equally great property management combined with an excellent liability insurance carrier (further fine tuned with a very modest amount of umbrella coverage), so I've never had the need for an LLC Rube Goldberg special in over 20 years across multiple states.I guess I got my liability coverage the old fashion way, I earned it.

The 4 point inspection had mentioned the hot water heater was over 20 years old and "on its last leg" the homeowners insurance company is requiring me to replace it to offer any water damage coverage is my understanding. 

I haven’t seen it brought up yet but it was mentioned during the tv coverage. 

The subtraction is allowed only for capital gains earned from qualifying property the taxpayer acquired on or after Mary 9, 1994, (but before June 4, 2009) and owned for at least five uninterrupted years prior to the date of the sale.See details below: This publication is designed to provide general guidance regarding the criteria the taxpayer, the capital asset, and the capital gain must meet in order to qualify for the subtraction and is intended to supplement guidance provided in the Colorado Individual Income Tax Guide.

House Hacking and having a supplement to my rent while building equity How did you find this deal and how did you negotiate it?

Even having just one or two rental properties can be an excellent supplemental income stream.