What this will do obviously is get our house off the books as the rent will cover the mortgage, taxes and insurance for the 6 months, then at the end of the 6 months when he gets back they will supposedly buy the house.What flaws do some of you more seasoned investors see in this.

He was responsible for taxes and insurance and first stopped making insurance payments.

Expenses include the taxes and insurance, which is often included in the payment.

The second part (TI) is calculated by taking the homeowners insurance premium which is paid once per year and the property tax which is also paid once per year (through it can be a little more complicated, see below) and dividing by 12.

If you read elsewhere here (and you should) you'll find the "50% rule" that says expenses (taxes, insurance, utilities, HOA fees, vacancy, advertising, etc.) will eat up 50% of the rent.

Finally, the tenant may do the maintenance wrong and cause a fire burning your house down (which may or may not be covered by the insurance).

Make sure you have insurance!

I wonder - would general liability insurance provide coverage for an incident like this?

Note that the "taxes & insurance" part of the payment are really expenses.

This is after all operating expenses (taxes, insurance, prop. management, repairs, vacancies, etc.).