What to do for liability protection on a rental unit?

[Linda Liu]

I'm curious to hear what others do for liability protection on a rental. I'm closing on a property that will be used as a rental; it's being financed with a mortgage. My initial plan was to form an LLC and take title in the name of the LLC. However, most lenders I spoke with said they will not allow an LLC to sign on the mortgage, so the mortgage has to be in my personal name. The banks did say that after the closing, I could convey the property from me to the LLC (but the mortgage would remain unchanged). I feel like this defeats the whole purpose of having an LLC, since my name on the mortgage ties me to the property personally and doesn't preserve the nature of the LLC as being a separate entity from me.

I’m interested to hear what others have done in this case. Is the only other option to do an umbrella coverage? If so, how do you decide what size coverage would make sense?