What if something happens to the house, are they insured?

I am sure they are, for replacement value, just waiting for the friendly neighborhood arsonist to pay it a visit...

I'm sure that a company with title would want their asset insured but I don't know if it would be at replacement value. More likely at market value as replacement could be a high cost (hence high insurance premium) number.

I may need to find that friendly arsonist.. I have a spare box of matches for a couple of these assets...

They must. If properties are damaged when they get them back I have heard of them submitting an insurance claim in some cases

They have some kind of blanket policy, different from what a homeowner would carry on their house.
I've had to meet insurance adjusters at REO properties that were vandalized (0ne time someone shot out both sides of a sliding glass door). It's usually a waste of time since these policies carry a pretty big deductable. But I guess if the house burns down, they get some payback.

I have a really crappy damaged listing that the AM submitted a claim for. Just got a contract on it, so glad to get rid of it...

I just provided access to an insurance adjuster on one of my REO listings. He was looking at 3 claims: 1) wind damage to the roof, 2) freeze damage to the plumbing, and 3) theft of copper fin tube baseboard hot water heating.

Around here we have to call the companies to make sure the insurance adjusters are legit- actually hired by the servicers- or just someone trying to gain access. Had one a couple of months ago call and the servicers had no idea, had never called the insurance company- they told me not to allow access under any circumstances. I'm glad I checked...

I had already discussed the amount of damage with the asset manager; he had told me to expect a call from an insurance adjuster as he would submitting a claim.

I forgot to mention the 4th claim for missing appliances.

Are the houses insured by the banks for liability?

I had a listing where the front porch was slightly off kilter but still sturdy.

A potential buyer joked (I think) "If I fall through this porch do I get the house for free?"

I have liability insurance but would it be the bank's responsibility if someone was injured at the property?

I can't imagine the risk of ownership without liability insurance, particularly if a sue happy lawyer thought a corporate owner had deep pockets!

The buyers have a responsibility to watch where they're going. Unless the bank is neglegent in some way I don't see how they can be held liable... its an abandoned property.
I always stress to agents showing my listings any to buyers to be extra careful, to bring flashlights, etc..

I agree with Jim that we should caution agents and their buyers to be careful while showing a property but there is always the risk that the stair step that looks safe will fail or that the railing will break, etc. That exposure risk justifies the owner having liability insurance.