The appraiser might just see my ADU as just a "feature" or a "bonus" of the property, rather than as additional square foot of the dwelling, even if my ADU is permitted and 50% larger than my main house.

@Les Jean-Pierre STRs are dwelling units that are rented for a period of 7 days or less, whereas LTRs are traditional rental properties. 

I found a house with a really  nice in-law apartment built on and originally thought was to turn to multifamily. called the town said it would be possible. he also said something about a dwelling unit that is a way quicker process to pursue. as long as I meet the standards like parking egress etc.  

For all options I would recommend some form of liability, property coverage (builder risk or dwelling policy, excess liability and workers compensation.I directly represent over 40 insurance companies and would happy to speak further about you current situation.

"Two family dwelling unit" is not exclusive to an umbilical HPR.  

In today’s age of instant messaging and social media, sometimes meeting face-to-face with the tenant can yield surprisingly positive results.

So if I only insured to $100,000 on my dwelling coverage, the liability policy would not kick in until $300,001 - so that $200,000 gap would be MY responsibility.  

Knowing the area, I saw equity instantly and jumped at the chance.

$200-250k doesn't buy much multifamily in most markets so I would encourage you to consider purchasing a single family residence with an ADU (accessory dwelling unit or mother-in-law apartment) as well as small multifamily options. 

Make you elect for the direct deposit route so funds come instantly.