Similar to how an umbrella shields you from the rain, umbrella insurance shields you from additional liabilities when other insurance policies have reached its limit. Landlords and property investors typically need to have landlord's insurance already in place in order to qualify for umbrella insurance coverage.
Keep in mind that Umbrella insurance is strictly liability coverage. This means that it will not cover structural damages to the home. It protects landlords and property investors in case of liability. For building coverage, you'll still need dwelling coverage (part of Landlord insurance or other dedicated policies).
No, umbrella insurance is optional. Though, you may consider getting umbrella insurance because it can save money in the event of a lawsuit.
If a landlord is compelled by a court to pay for damages, all asset held by the entity may be equally at risk. In other words, if one LLC owns two properties, both properties may be at risk to satisfy the damages. Umbrella insurance can cover your liability in this case.