How to save this deal?

[Luis Arellano]

I'm in the middle of buying a beautiful property, but during the inspection we found area in the house with knob and tube wiring. 

The seller got a quote from an electrician for 10k and we agree on splitting the costs. My agent is talking with some insurers, but sounds like they would not write a policy knowing about the wiring or if they do they won't cover the house in case of a fire.

Seems that my options are:

1) take the risk with a dodgy insurance, and fix the issue after closing. (getting some credit from the buyer towards closing costs)

2) convince the seller to do the wiring job before closing, and for me to contribute the electrician costs.

Note: the seller had a cash offer that was not much below to what I offered so they might not have a strong motivation to do the work before closing.

Any advice on how to save this deal??