You can increase the liability coverage on your regular homeowners insurance and also get a supplemental 'umbrella' policy, with can increase the liability limits further.

Or should I obtain an umbrella to cover them for liability purposes (each is covered by insurance already).I keep hearing and understand the concepts behind LLCs, but I also think about the fees, work, paperwork, taxes and accounting required to maintain LLCs properly so that they are not disqualified in a lawsuit.  

Your best source for protection is additional insurance usually in the form of an umbrella policy. 

I've also heard from people that it's better to invest the money you would in an LLC (which is $800+ per year in California) into some good Umbrella Liability Insurance to cover our other assets as well as the property itself.Any other suggestions are welcome!

It looks like I'll probably just get a huge umbrella liability policy.

Their proper use is incredibly complicated, and it would be nearly impossible for me to properly explain it, let alone specifically to your need.Also, talk to your insurance agent about umbrella liability policies and options.

We will project the 'all under one umbrella' attitude in our web site and arrange deals with the local attractions for our guests.

Do I need to form an LLC or is just an umbrella policy adequate?  

Is there any way to work things so that we could secure 30 year mortgages on these properties and keep them under our S Corp umbrella?

Instead of an LLC if it is for asset protection I would suggest leaving it in your name so you don't risk the mortgage being called due and instead go with an umbrella policy to provide additional protection beyond what your property insurance covers.