What about contingency clauses that protect me and the seller in the contracts?

I'm asking this out of pure protection concerns, cost is not an issue as I have found my friends Insurance Company is able to keep the commercial premiums the same as the residential policies.

It also protects you.

This is not like residential leases where there are protections for the lease, it over, bye, bye.A regional eating place in Pittsburgh just closed two of their locations because they could not reach terms with the landlord, lease was up, there is no agreement, the places closed.

. -- it won't protect against liability claims in most cases.

The buyer can decide to buy or not buy during the term of the option contract.Attaching a PA to the option is pointless.The buyer is already protected with the option which obligates the seller to sell.

Unfortunately the Protecting Tenants in Foreclosure Act expired at the end of 2014 and was not renewed.  

For Asset Protection alone, I would highly recommend setting up a LLC to flip under before buying your first property...

I am thinking that a second entity that finances the deals as loans/mortgages might work to both protect my interests and act as an additional layer of asset protection.

If you can show that your project will be profitable (comps, etc), that you can complete it properly and that you are serious about protecting your investors you will have a much easier time finding money partners.