Asset protection from tenants while house hacking

[Dominic Franco]

I have read through the forums, consulted my real estate attorney and insurance agent and have come to a dead end so I figured I'd start a discussion on here. 

My wife and I just bought a duplex and will soon be signing a new lease with our newly screened and qualified tenants. The home was purchased through a VA loan and is my primary residence. Therefore the property is in my personal name and not an LLC. We are self-managing the property so we considered forming an LLC for our property management "company". However, as I suspected, my real estate attorney informed me that because the home is in my personal name that the property management LLC would provide little to no protection for a tenant suing. So we turned away from the LLC route. I did some research and my real estate attorney confirmed that I should look into an umbrella insurance policy. So I contacted my insurance agent and asked how much coverage I currently had against a tenant suing me (none apparently) and how much coverage I could get. My insurance agent said, "I am not really sure that we have anything to insure against lawsuits - you do not have LANDLORD liability on this because it is in your personal name and is treated as the primary residence - therefore a personal lines policy not commercial."

My questions are:

1. Do I really even need coverage against a tenant lawsuit?

I did a VA loan on the property with 0% down so I have about no equity in the property at the moment. I just don't want to lose my whole life savings that I have set aside right now for investing.

2. If I do need coverage, what do you recommend? A separate insurance policy? An umbrella insurance policy?

I understand the chances of being sued (especially with being responsible with the upkeep of the property and screening tenants properly) are quite low but it's certainly not unheard of. 

Any advice is appreciated.

Thanks,

Dom