Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

I bought an umbrella policy.

I use to be sold on the Umbrella policy but then you have to up all your insurance premiums to meet the Umbrella policy which kills your cash flow. 

I worked really close with my insurance broker this year to make sure all of our properties were properly insured too because of rate increases and he assured me that my primary covers it and it’s listed on my primary and it’s also listed on the separate umbrella policy.  

Talk to an attorney, but a good umbrella policy will probably be sufficient for what you're doing (and cheaper). 

1) you don’t need/want an LLC2) get a $2M umbrella, super cheap and covers you when you ar responsible for the lawsuit, not the property. (90% of the time.)3) get a VERY good PM, you don’t want a professional tenant living there for a couple years without paying rent.

Get an umbrella liability policy.  

architecture for someone who plans to invest aggressively in real estate, specifically 2-4 unit MF properties, and possibly commercial 5+ deals in the future.Should I just manage a healthy umbrella policy and forgo the entities entirely?

-We have been told about Umbrella insurance from friends.

Good umbrella policy is a  good asset protection strategy