General LLC vs umbrella insurance for small-time investor

[Asim G.]

Hi All,

I have a quick question on how buy and hold investors manage the liability on their properties. I currently have 1 triplex in California, on which I have a mortgage and a regular landlord hazard insurance on this property. I don't plan on having more than 8-10 units total.

I am looking for more buy and hold properties in California and Arizona and was wondering what the best way of protecting self from liability issues is. One approach is to own the properties under LLC. I am not sure if I can do so since I have a mortgage on the property. Moreover, someone told me that assets in an LLC can be unravelled in the case of liability suits. Also, I was told that LLC's are not cheap in california and require regular meetings/minutes which might not be the right thing for a small buy and hold investor like me. This information is based on conversations with colleagues over lunch table could be wildly inaccurate.

Another option is to have umbrella insurance with large enough liability coverage. What I am not sure of is, what is the right amount of coverage. Is there a per unit or per property rule of thumb that investors have.