It's a good sales pitch, but it sounds like she didn't finish it :-).

What you should have to cover the eventuality she mentioned is an
umbrella policy. Most umbrella policies require a certain level of
coverage on the underlying automotive and homeowners policies, and then
cover any costs up to a specific higher total amount (commonly, $1
million) after the underlying policies "run out." The amounts she
convinced you to get on your auto policy are probably the amounts
required by the umbrella policies she sells. It's a mystery why she
didn't pitch you the umbrella policy as well.

Go to www.ask.com and search for "What's an umbrella policy?" for
additional information.