Even if you have hired contractors to do the work, house is in a LLC, and an umbrella policy in place I bet it will make you nervous thinking all that equity could be up for grabs if an attorney can prove negligence. 

Your homeowners covers you (the house, liability, and your items/appliances), while the renter's insurance covers their belongings that are not covered under your policy and their negligence. 

My lender estimates have only gone up by $50-$100, it's negligible.

The Memphis property was owned by a couple of out of state investors who were relying on an incompetent property manager and a criminally negligent contractor to steal anything and everything they got their hands on.  

If a real bank rents out a property and is found to be negligent then it too could lose a property just like any other owner.  

The city is also really trying to enforce code standards as much as possible to make it harder for negligent landlords to let properties sit and fall apart.

The primary issue is the lender is repeatedly negligent about paying taxes and insurance from the escrow they're collecting with the mortgage payments.

I can assure you their cash balance is much larger than any of us, probably combined.It's a fair and prudent question for you to ask, and I can understand some people prefer not to use that kind of system in their business, but unless someone can identify a specific vulnerability that does not involve teller negligence, I don't think you have to worry. 

Arguably the interest from student loans is negligible compared to the cash on cash returns from a good real estate investment.

But I have a hard time with the logistics: the case must look like a slam dunk (gross negligence by landlord?)