Patent enforcement lawsuits can be very, very expensive. However, you do not need lots of insurance coverage in many situations, especially for early stage inventors.
A $250,000 policy is designed to give you enough horsepower to start an enforcement lawsuit, go through the first couple rounds of back-and-forth with the infringer, and negotiate a settlement.
This size policy will not get you to the Supreme Court and back, but it will help you handle standard enforcement actions where you intend to license your patent to an infringer or where the infringement has just started.
For infringement where multiple millions of dollars are involved, a higher policy limit is recommended.