If you don't have insurance on this property and there is a fire that results in death or injury, the people hurt will own everything you currently own (unless you file bankruptcy). If someone trips and falls on the sidewalk or while delivering mail, or visiting the tenants, they will sue you. I can assure you that I have dozens of clients, who are thrilled that they had purchased insurance, and I have a handful who are really upset that they did not purchase enough (or any) insurance. I know of dozens of cases, where tenants in the process of being relocated (evicted) had an "accident" in an attempt to obtain money from the new landlord. Yes, you need insurance on every property you own.
There is no requirement that you have insurance, unless you have a mortgage company that requires it. However, my colleagues are 100% correct. You really should have insurance. I'm a little surprised that that anyone would spend the money to buy a property because it should be condemned, and then let people live in an unsafe condition without paying any rent. If you go without insurance long enough, it is possible that the prior owners will end up owning your house and bank accounts. Do you think they will be kind enough to let you live in the condemned property when that happens?
You should see a real estate and estate planning attorney to discuss asset protection and planning your estate as it is getting more complicated.
The above "answer" is for discussion purposes only and is neither intended as legal advice nor to create an attorney-client relationship. An attorney-client relationship is not created until after an in person consultation and I agree in writing to provide representation. I am licensed solely in the state of Arizona. You should consult with a knowledgeable attorney in your jurisdiction.
I agree 1000% with what the other attorneys have said. Don't be penny-wise and pound foolish!
While I would love to be your attorney and you may call my office any time to schedule a FREE consultation on California bankruptcy matters, the information provided herein does not create an attorney client relationship and is not a substitute for having a consultation with a bankruptcy attorney. It is important to have a consultation with a bankruptcy attorney as the information provided in this forum is limited and cannot possibly cover all potential issues in a given situation.