I have read in several places that the "rule of thumb" is that you need about as much driver's liability coverage as the sum of your assets. For example, if you own a $100k house "free and clear," and have $100k max-per-accident liability insurance, then that's OK. But if you own a $200k house, and you if you are at fault for a collision, then you might be sued for the value of your house. The "rule of thumb" would say to increase liability coverage to $200k. Similarly, if you had $400k of assets, you'd want $400k of liability coverage, because you might be sued for $400k.
One thing I don't understand is: the second example ($400k) implies that there are accidents with $400k settlements. If you owned the $200k house, and you were at fault in such a $400k accident, then wouldn't the other parties just sue your insurance provider for $200k, and then also sue you for the other $200k? How does having liability coverage in the same amount as the value of your assets magically protect them, if there are settlements which may be double the size of your assets?