[aigel]

I am not an expert - maybe some insurance guys can chime in. That said IMHO, an umbrella is necessary if you have any significant assets you care to keep. Your auto insurance example (you ending up under-insured) is only one scenario. There are other mistakes and accidents that are not covered under auto or homeowners policies which you should have some coverage for.

Note that your insurance may ask you to raise auto insurance coverage before they will sell you an umbrella (the risk of being under-insured in the auto insurance and the umbrella being needed will be significantly reduced).

G