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'm also adding an umbrella policy, so thank you all for the suggestion. 

Quote from @Chas Lumley: Hey all,I'm looking to make an offer on my first rental this week and was wanting to get different inputs on LLC vs Umbrella policies.I will be using a conventional loan and I was told by my loan officer that I can not buy the property under an LLC, but I could transfer to an LLC after acquiring. 

Then get a business umbrella policy.

But since the regulators and banks are both under the same Federal Reserve umbrella, it's akin to taking money from the right pocket and placing it in the left.

Personally I’d do a 1031 to save $40k, I’d skip the LLC, increase the limit on my umbrella, and call it a day.

So you don't need an umbrella.

@Inderpreet Singh  I use Liberty Mutual for my umbrella and have been very happy with them. 

My market also has this issue but I suspect less than Florida but my umbrella cost doubled last year.- as yet unknown impact from required structural inspections (bill 154).

For added security, consider umbrella insurance alongside the LLC.