Umbrella insurance 

So sad, the perils of plumbing.

It's possible that they mean that they don't want to carry owner financing, but you should clarify that.Be sure that you buy owner's title insurance too. 

I cant afford to get insurance with this loan. 

That is one of the advantages of owning property outright - yes, the return might suck, but I have homes that will cash flow, accounting for maintenance, insurance, taxes & capital expenses, at $300 per month.

The buyer sends escrow payments for taxes, sewer and insurance.  

@Bud Dwyer  You would have notify your insurance company to get it properly insured, who in turn would most likely notify the bank.

In no particular order:You might not have a first lien after all - At the closing, is your borrower obtaining a lender's title insurance policy from a reputable agent?

I don't know the costs in your state, they may vary, but I pay something like $1200/year to be an agent (license, NAR membership, MLS dues, E&O insurance, etc).I don't make a lot as an agent, but it helps me A LOT to facilitate my investing.

.), but larger ones are probably not something I want to really get into at the moment (full kitchen remodels, full plumbing or electrical replacements, etc.).