AirBnB the right way in primary home

[Peter B Ana]

We want to rent out a basement apartment in our primary home on AirBnb (or long term rental with standard lease). Would love sage advice on what/how to do this right.

ASSETS
650k equity in home, stock/bond investments in retirement and taxable accounts
No trusts, No LLCs, 2 Kindergarten age kids

ZONING
Town laws suggests that less than 1 week is not allowed. So I can stick to renting it out for 7 days or more. I've never done this before so don't know if this will be financially viable.

BASEMENT
The basement has an independent entry and exit, in addition to indoor stairs that lead to the rest of the house.

INSURANCE
Recently switched Homeowners insurance to Travelers because their coverage covers short term rental explicitly (Travelers was the only company with this clause)
Umbrella – Moving to a new company (Markel insurance, not Travelers)

QUESTIONS ON HOW TO DO THIS CORRECTLY

1. Is there any liability risk that puts the equity in my house at risk (~$650k)?
Is there any liability risk that puts the rest of my investments at risk?

2. Is long term rental inherently safer than short term rentals?

3. Should I be using a LLC and/or a trust somehow to safeguard assets? I have never done either so any pointers on where to start would be very helpful.

4. Does having an umbrella insurance from a different company (Markel insurance) than the homeowners insurance (Travelers) matter? Can’t find a competitive rate for Travelers so are forced to go this route.

Thank you so much for any guidance!