Umbrella insurance sits on top of the home, auto, and watercraft liability layers and pays above their per-occurrence limits up to the umbrella’s own limit. It also broadens coverage to liability types the underlying policies exclude — libel, slander, false arrest, and the rest of the “personal injury” tail the auto/home base does not pick up.
A $1M umbrella starts around $300–$500 per year for a low-risk household; subsequent millions are priced at $100–$300 each, with the marginal cost rising past $5M. The sizing question once your net worth is meaningful — start at $5M, scale to match or exceed net worth, and stack excess-liability towers above the primary umbrella — is treated in detail in section “Umbrella and Excess Liability as the First Line”; it is the asset-protection use case, and the right cost-of-coverage frame is litigation defense rather than cheap top-up.