Not sure if this holds for all items within a circuit, but this is generally how we do it for connectors...
Step 1 - establish the maximum voltage (withstand voltage, flashover voltage). You don't test it all the way to full flashover, you just establish the point at which you see a leakage voltage to the next pin over. Testing is done with a mated connector pair, to see when the leakage occurs to the next mated pair (or metal hardware if that is closer, although unlikely). Maximum voltage will be set just under the leakage voltage, normally to a nice round number.
Step 2 - Voltage rating is calculated from this maximum voltage. This is basically set at a level that is a percentage of the maximum voltage. Some of our connectors are set at 1/3rd of the maximum, a couple are at 2/3rds, but that's the highest.
Now, our connectors are not aimed at the household appliance market - I would think these connectors would be rated at 250V even if the max came out at 1000V - although the max is far more, 250V is relevant to this market. However, they might also rate it at 250V even if the max is 350V - I would expect that there is probably some legislation or standard that defines a required minimum amount for the max voltage. But that is totally an assumption on my part, so please don't assume this is valid for your item. Which means none of this is particularly helpful necessarily, just thought it might be useful information!