Here's a summary of the economics.They purchased the property for $280,000 in 2004.The loan balance is about $178k.Monthly principal and interest payment is about $1,265 with $709 currently going to interestProperty taxes are $4,116 annually and insurance is $1,000.Currently the house is vacant for the sale so there's no rental income.Therefore, the monthly burn is -$1,135 (ouch).For the sale:Property was originally listed at $335k and they received 0 offers at that price. 

What type of insurance should I buy under this condition?

The insurance company is going to rebuild all the units due to the amount of damage, but there has been some hold ups with the county due to permitting, changes in codes and such that has delayed the rebuild process greatly.

@William Huston you shouldn't be overwhelmed by calls for appliance, plumbing or HVAC problems.

You can deduct prepaid interest, insurance.

I did not think you did either but I am pretty sure you do.and in Oregon you don't need a real estate license but if your buying a property to resell IE your not owner occupy you for SURE need a developers license.. and to get one is simply a fee and you need a bond and insurance.. so we cannot make a blanket statement that its legal In all 50 states.. to buy then resell.. 

My costs go up every year in taxes, insurance, costs of repair, HOA dues, etc.. if you choose to, then definitely include something in return.  

Mine didn't see me needing the protection of an LLC until I grew larger but advised liability insurance.  

You'll spend a third of a million dollars on a phonebooth with a kitchen ... more if the plumbing works ... more if you have a "view" ... of the phonebooth next door.

Get a good condo lender, who knows how to read the budget and insurance requirements properly.