I prefer to learn from people that actually have been doing the business a long time & still are doing it.

@Garrett TjoeMy understanding is that you do not need separate utilities if the ADU is added to a lot with an existing Single Family Residence (SFR).

My realtor mentionedan umbrella policy so I’m trying to understand why or when that type of policy makes sense  

A number of people have asked this and if you use the search function, you can see replies to those posts. 

People that have high-drama often continue to have high-drama. 

If I'm understanding correctly, we could keep our 1st duplex with the FHA loan (until rates lower then we'll refinance) and then still use an FHA loan for our 2nd duplex since we have lived there for over a year?

Lot's of inaccurate responses, apparantly due to responders not properly understanding the situation!

It is my understanding that this needs to be done asap since I am aquiring it as is where is..How should I approach the current owner/tenant?

These are not people that criminals want to mess with.The US Postal Inspection Service has brought down mafia families and terrorist plots.

If I understand you correct, you may be able to structure it as a primary residence.