Can someone confirm/deny that this strategy would work?

You’ll only lose the guests who are allergic, fewer than those who have pets.Also, if someone even mentions they have a service dog, you can’t use that as a reason to deny them.

It's a mental exercise of; if you were hit by a bus tomorrow, what would happen?

A few facts:-property is listed at retail but I believe seller will contribute to closing costs and accept at least 5% off market price (only way I'd do the deal)-current rent is below market and will need to be increased 15-20%-tenants are making showings "as miserable as possible" so I'm thinking they know what's coming their way-currently month-to-monthThe pics of the property don't show any obvious signs of damage or abuse but I'm not sure I'm willing to risk this happening once I become owner. 

As mentioned, a claim may be denied if you haven't informed them.

There's nothing they can do about it.Even if Fair Housing does apply, they are clearly lying and trying to abuse the system.

This is highly abused and becoming more common place in the rental market ..sadly I have not read where a landlord has much they can do to stop this insanity without risk if serious fines and lawsuits

I would look at what standard you set for current tenant and deny adding a tenant based on your rules.

I know that, but in my experiences with insurance companies what they "should cover" and what they actually will cover without a TON of work, time and effort forcing them to cover, are not the same when it comes to time frames of incident to claim.... they will try to pass the buck and deny responsibility until you become a huge PITA to them.

The city denied us to use it as a commercial space, so we had to hire an architecture to draw a floor plan to make both units residential spaces, and up to code.So we decided to subdivide it into two residential apartment units, with full kitchens and a full bathroom in each.