Might be considered as a tenant which may cost you a little more. Better to be upfront with your insurance company than get a surprise if you have to file a claim. Call Glen Gorowsky Insurance and ask Glen if there is a concern 251.626.9566. You may be fine, but I recommend being sure. As they are immediate family it may be viewed differently.
Depends. The non-resident should have the right type of coverage (landlord's coverage--covering the structure). The parents should have renter's insurance. But that's done all the time--at least a landlord with tenants living in the property. The risk is that the non-resident didn't reveal all to the insurance company when obtaining the insurance. That would give the insurance company a huge opening to decline any claims, based on a falsified application. The non-resident should make sure that the insurance is appropriate and correct. If not, it should be corrected immediately.
If the owner doesn't reside at the property then a traditional homeowners policy will not suffice. The best type of policy would be a landlord policy. Similar to a homeowners with an allowance for nonowner residents. We write these all the time but the situtation is usually reversed where the parents buy a house and the adult children live in the home.