Most homeowners policies have a vacancy or unoccupancy clause, commonly kicking in somewhere between 30 and 60 days empty, and after that the carrier can deny certain claims outright. Water damage and vandalism are the usual exclusions. The exact trigger is in the policy wording and varies by carrier and by state, so ask the niece for the policy declarations page and call the carrier with her.
There's a second wrinkle. When the named insured has died, coverage often doesn't simply carry on for the estate. The estate usually has to be added or a new policy written in the estate's name, and a policy that's just being paid by autopay out of a bank account isn't proof anyone is covered.
Who eats a loss before closing depends on your contract. Most purchase contracts put risk of loss on the seller until closing and give the buyer a right to walk or renegotiate if the property is materially damaged. Read that paragraph in the contract you're using and don't assume.
After closing you'd be looking at a vacant dwelling policy, which typically costs meaningfully more than a standard landlord policy and often carries water damage exclusions of its own. Get a quote before you agree to a price, not after.
The bigger issue with eight months of utilities off is that you can't test anything. Nobody knows whether the pipes hold pressure or whether the furnace lights until the water and gas are back on, so either keep an inspection contingency or budget as if both are dead.
