Personal Excess Liability Policies (PELPs), more commonly known as Umbrella Policies, are very important to your financial well-being and are relatively inexpensive but many people do not have them and that is unfortunate.
Umbrella policies pick up where your homeowner and automobile policies leave off. For example, if you are in a car accident and your auto policy provides $500,000 in coverage but someone suffers a debilitating injury in the accident, you could be sued for much more than $500,000. If that happens, all of your financial assets would be at risk.
If you have assets that you would want to protect in such a situation, an umbrella policy is critical. You can get a $1M umbrella policy for about $250 to $350 per year. Additional million dollar increments can be purchased for even less.
Generally speaking, your coverage amount should equal or exceed your net worth. Getting a policy is easy and the best place to start is by calling the company that carries your home and auto policies because you can generally get a discount if you have all of the policies with the same company. Also, in order to get an umbrella policy, you must have certain coverage limits in place on the home and auto policies and the agent can check that when you request the new policy.
If you are feeling stretched by the premium involved with the coverage, consider raising the deductibles on the underlying car and home policies. When you raise your deductibles, the cost of the insurance goes down and that would free up more money for the umbrella policy.