Think of umbrella insurance — sometimes called personal liability insurance — as a fail-safe for your savings and other assets. If you’re sued for damages that are above the liability limits of your car insurance, homeowners insurance or other policies, an umbrella policy helps pay what you owe.

Note that umbrella insurance is similar but not identical to excess liability insurance, which gives you higher limits on the liability coverage you already have. What’s the difference? Most umbrella insurance also provides extra coverage that’s not included in your base insurance policies. For example, it may pay for legal fees and damages if you’re accused of slander (a false spoken statement) or libel (a false written statement).