Maybe not. The liability provisions in your policy—which compensate others for any harm caused by you or others in your household—typically cover a few hundred thousand dollars in damages, often up to $300,000. But you may need more protection than that.

Financial planner Laura Mattia tells the story of a restaurant owner she knew who was sued by a customer over food poisoning. Because the owner had, unadvisedly, mixed together his business and personal finances, his family’s assets—including his home and his savings—could have been lost to a damage award.

To the rescue came the man’s personal liability insurance, also known as umbrella insurance. It saved his home and most of his savings, says Mattia, CEO of Atlas Fiduciary Financial in Sarasota, Florida.

Umbrella insurance, which protects you in case you are sued for damages, sits on top of other insurance. If, for example, you have an auto policy that covers you for up to $300,000 in liability, and a homeowners policy that does the same, an umbrella policy will supplement both those policies if the covered amounts are not enough to satisfy a judgment.

Could you really end up liable for damages beyond those standard home and auto limits? Yes. Some possible scenarios: You crash your car, causing injury or death; your dog attacks a neighbor; or you engage in activities that can result in dangerous accidents, such as hunting, skiing or boating.

Such liabilities, though not common, can be costly. A trade group that provides umbrella insurance to CPAs, for example, reported that it had paid out an average of $957,000 on 43 claims over a five-year period.

To determine how much umbrella insurance you might need, or whether you need it at all, add up the value of any assets you have to protect. A typical guideline is to get coverage for your net worth—the total of your money in the bank, the savings in your retirement accounts and the equity in your home. Your 401(k) is generally protected from judgments; in some states, your primary home and other specific assets are shielded as well. So you might not need to include those in your calculations.

If your net worth doesn’t exceed the liability coverage in your car and homeowners insurance, umbrella coverage need not be a big concern. But if you’ve amassed more wealth, you might want to buy a policy.

The good news: Umbrella insurance is relatively inexpensive. A $1 million policy, usually the smallest you can buy, costs a few hundred dollars a year. Additional coverage, such as a $2 million or a $5 million policy, may not cost much more.

Buying coverage, however, may mean you have to spend more on auto and homeowners insurance. Insurers require certain amounts of liability coverage on those policies as a condition of buying umbrella insurance. And because umbrella policies are focused on injury caused to others, they don’t cover damage to your own property. If your house burns down, only your homeowners policy will apply toward your personal losses.