I was wondering, for apartments in particular that contain very few contents belonging to the landlord (apart from kitchen appliances), how necessary is this insurance for landlords?

Co-mingling is like if you buy a dirt bike from your real estate account, or buy appliances from your personal account. 

The house is made of pure cement and mostly needs cosmetic improvements, appliances and landscaping.

I would assume you would want to budget for roof 25 year life span. appliances and hot water heater 12 year life span. hvac 20 year life span, etc.

Completely different math and grade of appliances. 

In that town a brand new 2 bedroom apartment with granite and top of the line appliances is renting at 1200$.

Listing says new roof and appliances and "owner will provide a flooring allowance".

I think spending $30K on renovating/updating and putting brand new furnishing/appliances/TV's/work office will put this above and beyond the other vacation rentals in the small market. 

Big mansion with private pool and luxury appliances?

Depending on how long this would take, I could start renting a unit immediately after paint and new appliances and vinyl floor to get cashflow coming in, and work quickly to get the other unit rent ready.