It wasn't clear to me from the way you phrased it, and it's also kind of odd that you heard this info from a neighbor. 

I have an odd real estate issue I need tax advice on.

Hi Al, that is odd, considering how long she has been with you and how solid her track record is.

Oddly enough he has agreed to 15 year land contract at 15% down at 6.5%.

If that document exists the insurance company will have a copy and the odds of them offering to pay for it would be slim to none.Good Luck in getting it resolved.

“Owner finance” with a REO is really odd to begin with.  

But then, I've seen odd things happen. 

I have a kind of an odd questions for fellow landlords or if anyone is in the insurance side.Last year when Irma hit South Florida, I suffered quite a bit of damages on a number of my rental.A particular one is a multi family building - I had fence damages, tree branch fell on roof, poked a hole through the roof, through the ceiling, debris everywhere inside, outside...so I filed a claim to my windstorm insurance carrier.I was lucky that the apartment the branch went through, was vacant at the time. 

I suggest you decide what your final price is before you submit your first offer.Note: something I find odd but seems standard is the EXPECTATION that a renegotiation will happen after the inspection.

Odds are they wanted the place cool and comfy and now its time to pay the piper .