Sure you can. As others will point out, it'll violate the lender's "due on sale" clause, but that isn't a deal-killer.
The owner (the seller) would continue to pay for homeowner's insurance (and mortgage insurance, if he/she was paying that). The owner is still the owner.
You as the buyer would have a contract for deed, but wouldn't be the owner yet. So your insurance coverage would be renter's insurance.
Check with a lawyer for more information on contract for deed. And check with an insurance agent on who'd be responsible for what insurance.