Please help with insurance!

[Dima A.]

Hi everybody, I'd like to get some feedback on an insurance question I am struggling with.

Here's the situation: I am 33% member in an LLC that owns and rents real estate. For simplicity, let's say we have a 60k home with a 60k mortgage. We have home insurance, with a personal liability policy of 100k. The kicker is that every member is personally guaranteed on the 60k loan to the bank.

The question is this, if the LLC is sued by a tenant for whatever reason, for let's say for 500k in damages. What will happen??

My understanding is this: the insurance policy will cover 100k of the damages, and we loose the 60k home (lets say our only asset) to the party suing us, but no more because of the limited liability provision (assuming we did not do anything grossly negligent, etc) and the company is bankrupt.

But because we members are personally liable for the loan, wouldn't each member be stuck having to pay 20k to the bank?

How can one protect from such an incident? Is that what umbrella insurance policy covers? Will ANYTHING cover such an event?

Thank you for all your help in advance!