An umbrella policy provides additional protection against lawsuits that might be brought against you. If you own substantial assets, you should consider obtaining umbrella coverage to help fend off large lawsuits that might incur from incidents involving your home, auto, boat, rental properties, or elsewhere.
When you have umbrella insurance, the underlying auto, home, or other policy provides coverage for the first portion of a lawsuit. After the liability coverage in the underlying policy is exhausted, the umbrella policy picks up and continues to provide coverage. You need to have minimum amounts of coverage (usually $500,000 in auto liability and $300,000 in home liability) in order to be issued an umbrella policy.
Umbrella policies are usually given in increments of $1,000,000 per incident, and are relatively inexpensive. You need to have a relatively good recent history (3 to 5 years) with regard to insurance claims to be able to qualify for most companies' umbrella products.