Umbrella insurance is a type of personal liability insurance that provides additional coverage beyond the limits of the policyholder's existing insurance policies, such as homeowners, auto, or watercraft insurance. It acts as an extra layer of protection, typically offering coverage from $1 million to $5 million or more, and kicks in when the liability limits on underlying policies are exhausted. Umbrella policies protect against major claims and lawsuits, including bodily injury, property damage, certain lawsuits, and personal liability situations, helping to safeguard the insured's assets and future earnings.