If the tenant still has possession of the property, an eviction lawsuit must be filed by the landlord.

Nevertheless, I would inquire and ensure that the home is being sold with the typical new construction Statutory Warranties, and I would want to ensure that the warranty start date would be the date you take possession.

You got title of the property but they got physical possession if they're in the property.

Essentially, the criminal act of the third party was against you (more so than the tenant), because payment had been delivered to you and thus was "in your possession". 

So do they pay the entire price of the house if you lose it to adverse possession?

Nothing wrong with putting in the sweat equity, it will make you a better investor and appreciate those that possess skills you do not have.

You may be able legally acquire that strip of land under a theory of a legal doctrine called Adverse Possession.

Is this the typical renter's insurance which protects the renter's possessions or something else?

They possess all the resources necessary to provide the information you need to make an informed decision.

Many sophisticated Sellers will want to try and understand which Buyer possesses the highest probability to close and materials like this can certainly assist.