Leaving her policy in place is the option that reads as easiest and is the worst one. Insurance follows an insurable interest. Once the deed is recorded in your name, she no longer owns the building, and if a fire happens the carrier can look at who actually owned it and deny or fight the claim. You'd have a burned duplex, an unpaid loan in her name, and no coverage.
The usual structure is a new landlord or dwelling policy in the name of whoever now holds title, whether that's you, your LLC, or a trust, with the existing lender listed as mortgagee exactly as the loan documents require. The old policy gets canceled only after the new one binds, never before. Many operators also add the seller as an additional insured, since her name is still on the note and she has real exposure if something goes wrong.
The part people miss is what that does to the payment. Once the premium stops being paid out of escrow, the servicer's next escrow analysis will show a surplus and the monthly payment can drop, sometimes by a couple hundred dollars, and a refund check may go out in the seller's name. You want to know where that check goes before it's mailed. The other side of it is that the mortgagee gets a declarations page showing a new named insured, and that's one of the more common ways a lender notices a transfer at all. It doesn't mean they'll act, but you should decide in advance how you'd handle it if they did.
Get the coverage confirmed in writing by your agent before closing, including whether the carrier will write it with title held by an entity.
