I understand umbrella insurance is very popular on this site, but for me if there is a catastrophic incident on your property you can never have enough insurance and the next level would be your assets which includes things in your personal name.  

@Samantha Serenes I totally understand your fear,I am myself very concerned about those type of problems,I seem to be meet with arguments as it rarely happens,if I worry about those stuff maybe rentals aren't for me etc etc..I just wished there could be a decent shield against those type of problems,people will say there are but i am not convinced yet,everything is OK until it hits you,if it hits you then we all know it may get catastrophic for the landlord,and it seems that being preventive etc is definitely not eliminating all the risks,the answers I seem to get are more like I should calculate if its worth it MONEY VS STRESS .. not really what I would like to hear..

If the renovation goes longer, or whatever unexpected catastrophe happens, I can return their deposit and apologize and not have potential liability that a lease opens you up to.

We have a strong cash position and passive cash flow under conservative assumptions, even after making meaningful investments regularly, such that we could survive for months or years without a paycheck or under catastrophic market conditions. 

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.

The main challenge is that I had the property under contract TWICE with buyers who had catastrophic personal issues come up (major car accident and surgery).

The main challenge is that I had the property under contract TWICE with buyers who had catastrophic personal issues come up (major car accident and surgery).

If you are concerned about making an offer, then learning of some catastrophic issue that will be a significant expense that affects your offer, that is exactly what an inspection is for. 

I was wondering mainly for liability reasons whether we need to include specific clauses in our lease to protect us in case of an incident or catastrophe, e.g. if someone falls down the steps, short-term guests get into a fight with each other, someone cooks meth in their room, etc.

I guess it also isn't a total impossibility that another large quake like the Northridge one could happen again.I have earthquake insurance because it would be a life-altering, catastrophic loss if for some reason I had complete losses or heavy damage (essentially, total losses) on both properties.