If you're going the umbrella insurance route, make sure it will cover you for several things including just the routine slip and fall (like mold or earthquake).

My agent for the last 20 yrs, said that I need an umbrella per LLC.

You have insurance but you can add an umbrella insurance policy if you are worried.Make sure you have the correct STR insurance which is not an owner or landlord policy.The house is paid for - yes put it in an LLC.  

Umbrella policies, LLCs, holding LLCs, land trusts, etc.

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.