Or, do they want to be listed as beneficiary to any claim payout?

I could claim for diversity, but the high return I acquired at good buying times.  

I am sure we have all played the insurance game and it can be quite frustrating trying to collect for what you need to replace or repair.A cost segregation study can serve as a substantive document that an owner can use as support to a claim that is being disputed to their favor.

I just want to make sure that by law it is totally fine, if they cannot claim that they still live there and the only way to lock out would be through court thank you

The insurance is there to pay out any claims that arise against whoever is named as beneficiary on the insurance policy -- in this case the LLC. 

You would have to take them to small claims court and even then you would still have to collect the money post-ruling which could get tricky depending on the laws. 

@Ryan BurlisonThey will be Quit Claimed into the LLC.

As I understand it, if you have considerable hours managing your own property (I think it’s currently 750 hours per year) you can claim real estate professional and take losses against w2 income.  

$7 trillion in stimulus, loose monetary policy, going to war in Ukraine, tariffs, limited drilling, and 5-10 million fewer workers (limited immigration for 1.5 years, mass early retirement during the pandemic, added deaths, millions more on disability with long covid or claims of it). 

., it doesn't seem so, but...I also know there's a legal option to let the tenant break the lease without penalty and move somewhere else, but they may not want to depending on the situation.I do have a somewhat vague, but contradictory clause that waives my liability for all uninhabitability claims in the lease.