An umbrella policy will help protect you when the limits in your underlying policies are exhausted. The umbrella policy is just want it sounds like, an extra layer of coverage that lies on top of your other policies.
The umbrella protects you if you are sued after an accident. If you are sued it is possible to lose your assets like any savings, real estate, etc. You don't have to be extremely wealthy to need an umbrella policy, anyone can be sued and that means court costs, legal fees and other expenses will need to be paid either by your insurance policy or you if your policy limits are met.