For example, for liability purposes some firms E&O coverage will not apply if an agent lists their own personal property  

What is it exactly you are seeking coverage for?

Your friend Quit Claims her interest in the property to the investor and he/she acquires an income producing property (~$1,700/month) for a $25K investment, a 30% cash-on-cash return after debt coverage.  

The Denver Post has a fair bit of coverage on the topic.  

This could or could not be covered depending on the coverage form within your policy. 

As far as insurance, there is no concern - you simply won't have any insurance coverage (regardless of whether you pay the premium or not), because your carrier will refuse to pay claims once they figure out you had improperly installed electric wiring

I called my bank to get landlord insurance and they say it would cost $233k to rebuild so that is the policy coverage.

Moreover, they will impose discipline on the construction / rehab process by advancing funds according to construction draws, requiring routine inspections, checking for adequate insurance coverage, checking mechanics liens, etc. 

I am going down the road of picking up rentals as a buy and hold investor for the purpose of supplemental retirement income.  

From there, I'd like to move into fix and flip and buy and hold to supplement my income.