Jeanne Salvatore, vice president for consumer affairs at the Insurance Information Institute, says that umbrella policies pay in addition to your liability limits. For example, if your liability limit on your auto insurance policy was $100,000 of bodily injury protection per person and $300,000 per accident, the full $1 million in coverage would kick in after you have exhausted your auto liability coverage.

Most of the risk is assumed under the primary policy, which explains why the personal liability umbrella is so inexpensive. You can buy a $1 million or larger umbrella policy for less than $200 a year.

Many companies will not sell you an umbrella policy unless your primary insurance coverage is with them. In addition, your insurer may stipulate that your auto or homeowners liability limits be at least a certain amount, such as $200,000 to $300,000. Umbrella policies are usually sold with a deductible that might run anywhere from $250 to $1,000. If you are on the hook for a multimillion-dollar lawsuit, that is a small price to pay.

It is the personal injury protection that goes beyond the coverage in your auto and homeowners policy. Generally, personal injury encompasses false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Most primary policies cover bodily injury and property damage, but not personal injury. Certain umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.

Protection against claims and lawsuits does more than simply pay for the damages. Even if a lawsuit is frivolous, you still face the expense of defending yourself. Your liability coverage will pay for lawyer fees and defense costs, which can quickly add up.

Typically, the umbrella will not cover claims arising out of a business endeavor. If you own a business — even a small one — you will need to buy a business insurance policy to be covered against liability claims.

Depending on the law in your state, the umbrella policy will not necessarily pay for punitive damages, either. These damages, above and beyond any actual monetary losses, are awarded to punish wrongdoers for their conduct and may not be covered by any insurance policy. Also, as a general rule, the umbrella policy will not cover intentional acts, unless there are extenuating circumstances.

Although umbrella policies are relatively inexpensive, the question remains as to whether you really need one. As with any type of insurance, you do not want to buy unnecessary coverage. Start by analyzing your risk of being sued.

Perhaps your family has a swimming pool, trampoline, or swings in the backyard that pose a danger. If you have frequent visitors to your property, there is a risk of accidental falls. Maybe you are a golfer who narrowly misses hitting someone during every round.

On the other hand, your personal situation may make lawsuits extremely unlikely. Maybe you do not own a breed of dog that is a threat to anyone, unless it manages to lick someone to death.

Before making your decision, compare the umbrella premium with the cost of raising the liability limits in your homeowners and auto policies. For less than the cost of the umbrella policy, you usually can raise your liability limits by several hundred thousand dollars. In fact, if you raise the deductibles on your auto and homeowners policies, you might be able to increase your liability coverage for less premium than you are paying now.

In any event, at a time when million-dollar verdicts are not uncommon, umbrella policies are worth considering.