I don't know the ins and outs of insuring property when renting to students, but I do know that my husband and I had to jump through extra hoops when we bought our income property because it wasn't owner occupied.
Back on topic though, our insurance company is driving up CRAZY right now because the duplex is situated on a 100 year flood zone. That's right, we have to buy special insurance because there is an infinitesimal chance that sometime in the next 100 years, the land will flood. In Arizona. Where you have approximately 360 days of sunshine per year. Where the only river nearby is dry and a few miles away.
The insurance company keeps requesting pictures of the property. We've followed their instructions to the letter TWICE and the pictures are supposedly still not satisfactory. We are now thinking of calling in the photographers at "Vogue."
I feel your pain, DeltAlum.