Umbrella Insurance provides exactly the type of coverage that it sounds like it would; it provides an umbrella for you to stand under. Liability issues are everywhere and you never know what could cause someone to present you with a lawsuit. Umbrella Insurance policies protect you from liability issues the go beyond the liability limits of a standard, such as your homeowners or car insurance. So that if you exceed the liability coverage limits on an insurance line, you will still be protected.
Most liability coverage that rests within your current insurance policies only covers bodily injury and property damage to others. Umbrella policies will extend those limits to not only provide additional coverage for bodily injury and property damage, but also to cover things that are not listed under regular liability allowances. Every policy is different, so what is considered a covered liability issue under one insurance line may not be covered on another insurance line. Umbrella Insurance kicks in when these situations present themselves and/or you exceed to amount of liability coverage for the events that are already allowed under your regular insurance policies.
You may not think you need an umbrella policy, but consider this: What happens to you and your family's assets should you be sued for something that occurred at your home and the legal costs of the lawsuit greatly exceed the liability coverage defined by your homeowner's policy? Who will pick up the tab if you are responsible for a multi-car accident and your liability costs exceed the limits on your car insurance by thousands of dollars?