Appears the guests may have left the faucet "on" when the pipes were frozen and when no water came out, forgot to turn it "off".What may have caused the overflow of the sink is maybe the drain lines were also frozen?

In Reno and metro areas, insurance companies primarily focus on roofs, the age of the building, wiring updates, and water pipes, as mentioned @Cameron Moore.

If the house was built in the 50's or earlier than you probably have cast iron pipes.

On another 4 bedroom house the oil boiler itself needed replaced, since the boiler itself exploded, and only about 50% of the rooms had radiators and piping. 

The sellers countered at 450 and closing costs.

I went over to check and they were leaving their sweets like cakes on the counter.

Yes you can buy stuff over the counter however as said most of it will be junk.

However a couple larger items that should have been discussed: the pipes would freeze every winter (we've since found a fix), no water shutoff exists in each unit, the well pump has to be turned off and cut water to all 18 units, no pest control was ever done on the property, there was a unit that would take on exceptional water during rain due to improper prep and installation of a new concrete slab.

Focus a lot on the kitchen counters, hard surfaces.

I'm sure some policies have all kinds of language in them, but if it guarantees me full replacement that is what I would expect otherwise my granite counters would be replaced with laminate and my tile and hardwood replaced with vinyl and the cheapest carpet.