Seems the trigger is when the hazard insurance is changed. http://www.biggerpockets.com/forums/311/topics/183...The best solution I have found when talking to my attorney is to get an umbrella policy to "reduce" the risk.

As a  result, the funds that were rolling for today it was better to have a simple LLC, umbrella insurance policy, and proper business/landlord insurance added on.

My belief is if piti is $2400 and rent $3k, your cash flow is very small (maybe $100) when allocating for all expenses (vacancy, cap ex/maintenance, PM (even if self managing, allocate PM costs), misc (bookkeeping, share of umbrella, share of office expenses, rental tax, etc).Next fear is that in most markets a hands off ADU that cost $231k will be lucky if it adds $181k of value (negative $50k in value).  

It’s creates too much of a hassle,  looking back, leave in your own name and get a large umbrella policy .   

If you have a spare $500k-$1M in cash/equity somewhere else, upgrade your umbrella policy you obviously already have as it is waaaaay more important than an LLC. 

I got an umbrella policy though.

Keeping it simple by just putting into your name and getting good insurance with an umbrella policy will be best.

@Clinton Jensen  I don't think anyone answered one of your questions about insurance, they're talking about an umbrella policy which provides additional coverage if someone sues you, above and beyond your normal home insurance policy. 

I’ve got mine covered by a large umbrella policy.

I know the LLCs will provide a layer of protection in addition to my umbrella insurance policy, which is great.