Fix the issue and maybe require the upstairs tenant to have 80% floor coverage with area rugs to reduce the noise further.Musicians and others may look for cheap places but the rents you're talking about don't sound cheap (and frankly it's too large to be "cheap").Is a 1% dumpy rental the best you can do in the Nashville market?  

Of course flood damage coverage is unique to the national flood insurance program, but basements can fill up with water from a lot of sources and I see them every week.ServiceMaster or similar companies are good but they charge a lot for work that's not rocket science.  

Total premium is 1027, and seems to be the cheapest from the 10+ insurance brokers and companies I called, for this amount of coverage under a replacement cost policy.What do you think?

For builders risk and vacant house coverage, you can contact the company given in the profile of @Tim Norris .Typically, insurance companies want to know the age and composition of the roof.

If it's a guy who falls off the roof, your insurance should protect you if you have the proper coverage and liability limits.Besides, if you are flipping a house or two at a time it's very likely you could sell your inventory by the time a suit could move from complaint to judgment.

We than started supplementing that with pure investments.

If you are forming an LLC for liability issues, insurance and management are more than enough, this has been kicked around a lot on BP.Another note, RE issues and title issues change, in recent years and even months, title concerns with quit claims are arising as to quit claims breaking or hinder title searches and coverage.

I'm currently a teacher and looking at real estate to supplement my income!

These were popular for decades, no more, there are no advantages and still more  disadvantages, like insurance coverage, loss payee collections, authority of a buyer to conduct official business, like building permits. 

Your insurance agent can arrange that and you'll need to take that binder and paid receipt for coverage to settlement, unless other insurance provisions have been agreed to.