Homeowners insurance coverage on vandalized foreclosure???

[Daniel Rubenstein]

I recently saw someone buy a property at auction only to enter the property after purchase to find the house totally vandalized (broken windows, holes in walls, broken floors, concrete in plumbing).  They then somehow received 15K from homeowners insurance.  I am unclear if it is their Homeowners Insurance or the previous owners, or if the bank/trustees have some kind of coverage...??  

But I was wondering, has anyone heard of such a thing?? is this possible?? If yes, what are the parameters for receiving benefits?? 

TIA