My intention is to only sell for strategic (after tax return increase) or catastrophic (unplanned) reasons.

The purpose is just to cover catastrophic loss like fire, tornadoes, etc.

It's likely brought on by the marketing ploys of the attorneys in the business, who capitalize on those outlying catastrophic instances.

Well right now at 37 I do not have health insurance.Luckily I have been very healthy so far with little to no issues.The issue I have is policies.The insurance companies do not cover much of the payment yet charge a high monthly fee for their policy.If you go into a doctor's office with insurance they will charge the maximum from the insurance company.So example with insurance a bill comes to 150.At 50% my co-pay would be 75 plus I am paying monthly to the insurance company for the policy.If I say I am not insured and pay cash they charge me 100.I save on costs not having to pay monthly on the policy just when I need to go AND I don't have some stupid policy telling me which doctor I have to go to.I also don't have the primary care doctor pumping me with pills which have side affects because the insurance company doesn't want to pay to go see a specialist to fix the problem.Also the specialist that you have to go to with the policy can be far away and the a long time before you get to see them so you suffer longer.Now you can get catastrophic care if you need to go to the hospital.You save on regular doctors visits but if you have something serious you get the insurance to cover the large bill.

And even then, unless it is catastrophic, I don't see it crashing - as in 20%+ There will be dips and bumps but SF is its own animal with its own rules.

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

Clearly the risk of catastrophe losses has greatly increased and continues to increase. 

Maybe just something catastrophic?

The named insured should be the LLC, with you as an additional insured.I don't believe that by itself it would create any company veil piercing, but I am sure that if attacked, that would be one of the factor used to attempt to prove the alter ego.I would be more concerned however that your insurance may refuse any coverage in case of catastrophic claim as they would raise that you did not disclose the proper ownership of the property and its associated risk, and as such defrauded them.I had no issue with my different insurances to change the named insured to the LLC without having to cancel the policy. 

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.