An umbrella policy provides excess coverage above and beyond what is provided by your homeowners and auto insurance policies. As an example, let’s say your auto insurance pays $300,000 of medical expenses per accident and your umbrella policy is for $1 million. If you are sued for $900,000, your auto insurance would pay $300,000 of the damages and your umbrella policy would pay the remaining $600,000. 

Umbrella policies usually provide roughly $1 million to $5 million of additional coverage, and it is possible to get more if you have lots of assets to protect.  A $1 million policy is sufficient for most people and only costs roughly $200 a year (about $16/month)