An Umbrella Policy serves two purposes. First, it provides excess liability limit over the scheduled underlying policies such as General Liability, Auto Liability and Employers Liability. Second, it fills some gaps in the underlying coverage.
For example: A covered claim against you is rewarded $1.4 million dollars. You have one million dollars in general liability coverage. In this example your umbrella policy would pay the additional four hundred thousand dollars to settle the claim.
If a catastrophic liability loss occurs, an umbrella insurance policy can mean the difference between a business surviving, or not.