My question is, does a rental property need to carry a different type of insurance since I am no longer living in it or will the old homeowners cover it still despite it being inhabited by tenants?

The top unit is functional, however potential updates include, refinishing the hardwood floors, updating the kitchen, updating the bathroom, replacing 7 windows and most importantly blowing insulation into the attic (my bed room) so that it is more inhabitable during the summer months.

It was affectionately nicknamed Cabrini-Green by the local cop due to the condition and a few of the tenants inhabiting the building. 

@Zach KrietemeyerYou will need to apply for a certificate of occupancy (CO) before anyone can inhabit the space

The property was inhabitable and required over $100,000 in repairs, including foundation and retaining walls work.

You'll get the MF and ease into MF investing/rehabbing/managing, and your mom can inhabit one of the other units (your husband might be thankful for this).

Are they inhabitable?

Can they sue for inhabitable conditions?

We completed the home inspection, insurance inspection, I looked at the property, the agent looked at the property, my property manager looked at the property, and the tenant inspected the property and found it to be inhabitable.

@John Teachout yes two of the old building are inhabitable and not worth fixing.