Because the scenario is exactly as you said.
Woman in the article buys a house to be her retirement nest egg. Something happens to it (it gets bulldozed and burnt to the ground). Insurance company refuses to pay. She's lost everything.
Only in this case, she probably did nothing wrong.
Seems a bit strange, this woman is claiming she is losing $1400 month in rental income...when it appears no one must have been living in it?