Umbrella Insurance gives extra liability coverage meant to protect you against catastrophic losses. When your auto or homeowners liability limits have been reached, your Personal Umbrella Policy (PUP) kicks in.
This policy adds coverage to your initial limits.
Ex. Imagine you cause an auto accident and you're liable for $400,000 in bodily injuries to the other driver. However, your auto policy Bodily Injury Liability limits are $250,000/person. In this situation, you would have to pay the difference of $150,000 out of your own pocket unless you have an Umbrella Policy.