What’s the Difference Between Liability and Umbrella Insurance?

Quick answer

Liability coverage is the protection built into your home and auto policies, up to a set limit, usually $300,000 to $500,000. Umbrella insurance sits on top of those limits and extends protection further, often into the millions, once the underlying policy is exhausted. You need both. Umbrella coverage doesn’t function on its own, it activates only after the underlying liability limit is used up.