I know often times people on this forum say they are unnecessary and don't always protect against liability and just get a good umbrella policy.  

Remember that the more complexity increases not just legal set-up and ongoing fees, but tax prep and advising fees as well.There are several considerations that can go into the analysis of whether you need an LLC or whether a large insurance policy will suffice.

Currently, we have a homeowner's policy which extends liability over the rentals. 

Your financial activities are essentially outsourced to another institution, which may have its own policies and vulnerabilities.What Can You Do?

The ones still open to adding new policies will only insure buildings built after 2000, or 1980 (depending on the insurer), and you have to be claim free in the last 5 years.Unfortunately, $9k for a 10u does not surprise me. 

@Michael Plaks your policy as you describe is much more professional and palatable.

Once that deadline is broken, I do not give that same renter another chance.You need to really think this through, develop a policy, and run it by an attorney to ensure it is legal and makes sense.

Also, review utility bills, insurance policies, maintenance invoices, and property tax records to cross-check reported expenses.

I would hit them with a pet violation or whatever your policy is.

Meanwhile most who obsess over entity formation fail to carry proper insurance, work with unlicensed and uninsured contractors, fail to execute contracts, can't explain the difference between being listed as additional insured and certificate holder or request to be listed as additional insured on vendors insurance policies etc.