The insurance companies usually want you to have an insurable interest in what you're insuring when you bind a policy with them. (Progressive is making you verify an insurable interest in the vehicle in question before allowing the purchase, based on other comments.) You don't actually have an insurable interest in that car until you have possession of it. Therefore, you're going to potentially have an issue with buying a policy. The N.O. policy gets you around that.

The other reason why an N.O. might be to your advantage: What if the deal with Carvana falls through but you find another option in a short period of time later? You'll have a policy that can be changed over no problem without having to shop again.