You don't have to be a millionaire to be sued like one. Million-dollar judgments against individuals for negligence are still relatively rare. However, receiving a lawsuit with a million-dollar demand is more common. If you receive such a court summons and you have only $100,000 of coverage, you may lose a lot of sleep.

Umbrella policies offer inexpensive "peace of mind" for most types of negligence claims. Automobile accidents are probably the most common source of serious claims. This policy supplements your basic automobile liability with extra million-dollar layers of protection. It also covers other types of catastrophic claims such as a neighbor's child drowning in your pool or the delivery man being seriously injured by falling over your child's toys.