Umbrella insurance is a policy that extends your third-party liability coverage beyond the limits that are in your current home and car insurance policies.
If you are ever sued, you will use your home or auto liability coverage to pay the costs associated with the lawsuit. However, if your liability claim goes beyond the limit in your standard home or auto insurance policy you will have to pay the remaining balance unless you have umbrella insurance.
If you have umbrella insurance your coverage will take over once your standard liability coverages run out. This means you will not have to use your savings to pay the remainder of the lawsuit.