The NYTimes has written more than one article on the benefits of umbrella insurance.  This one  has some interesting horror stories, although I wish it had been able to interview the actual policyholders and not just the insurance agents and lawyers.  Although the article I've linked to is mostly about umbrella policies for the rich, it is my opinion that these policies are part of the overall asset protection package for just about anyone worried about potential liability.  The June 2011 issue of Money magazine opines in its Help Desk column that

 "Umbrella insurance is important if you own a small business or other wise have a high risk of personal injury suits (say, you host lots of guests), says Amy Bach, executive director of United Policyholders.  Plus, it's cheap; A $1 milion policy costs $200 to $500 a year."  

(Sorry, I could not find an online link to the column.) 

I tell clients that insurance, including liability insurance and umbrella insurance, is the first line of defense in asset protection.  Only after those are in place should you consider the next levels, such as entity formation.  While I've been told that umbrella insurance has enough "loopholes to drive a truck through," I've also seen instances where policyholders were glad they had it. Apart from the payout if you are found liable, these types of insurance usually pay the costs of defense, which means you aren't out the lawyers fees and other legal expenses to fight a lawsuit. 

Like many forms of insurance, you'll actually be better off if you never have to use it, but the price is reasonable enough to make it a valuable arrow in your asset protection quiver.