First of all, it doesn't matter if "someone" was living in the house - when the house isn't "owner occupied" any longer, it no longer qualifies for a HOMEOWNERS policy.
Can the executor be held liable, for NOT securing the correct property insurance for the house? Maybe. Did they receive the cancellation notice on behalf of the property owner? Or did the policy cancel before grandpa died? Or did uncle take the cancellation notice and throw it away?
To be held liable, you'll have to prove that executor KNEW that the insurance cancelled, ON THEIR WATCH, and that they HAD time to replace coverage, and didn't.
How much would she actually be liable for? Up to the market value of the house, MINUS ALL LIENS, minus other creditors. If Grandad was mortgaged to the hilt, and owed Medicaid more than the house was worth, ie, if the estate is insolvent, then there's no actual loss to you - you wouldn't have inherited anything anyway, and it wouldn't have made sense to spend money from the estate, on insurance. So she wouldn't be liable, because there are no DAMAGES.