How to resolve liability risk on uninsured rehab property prior to closing

[Paul Haughton]

I have a contract to buy a distressed single family house that I plan to rehab and sell. The house is vacant and uninhabitable as is. It sustained water damage from a broken pipe in the kitchen last winter. The insurance company cancelled the homeowner's policy due to the condition. 

I plan to get builders risk insurance after closing. Here is the challenge. I want to kick off the due diligence. But the seller is very concerned about liability issues during my due diligence period (i.e., if someone gets injured on the uninsured property). Has anyone dealt with this before? What options do we have for working around that concern?