The follwing is a brief outline of just how auto insurance works in Texas. Texas is a ‘tort state’ which means that you are responsible for the injuries you cause as a result of an accident. Therefore you have to have a proof of how you are going to pay up should you be involved in an accident. This obviously means that you have to have an auto insurance which has more than the minimum coverage. Hence minimum liability insurance is a must in Texas. The liability cover has to be a minimum of $20,000 per individual for bodily injuries that you cause to the other persons(s) and up to $40,000 for all. Apart from that, you have to be adequately covered to enable you to pay $15,000 for damage you cause to the other party's personal property in the accident.

The Texas Personal Automobile Policy regulations offer eight types of coverage. By law you are required to have basic liability coverage. The other seven types are optional. If you are leasing or financing a new car however, dealers may require that you have collision and comprehensive coverage as well.

Penalties for violating the states’ financial responsibility laws are severe. A fine of $175 and $350 may have to be paid by the first time offender. For subsequent convictions $350 to $1,000 could be charged. Apart from this, the driver’s driving license can be suspended or, worse still, the automobile can be impounded by the authorities. To avoid this one has to carry the proof-of-insurance card at all times and produce for scrutiny on demand by law enforcement officer. This card is sent to the insurance policy holder after he purchases an automobile insurance.

Texas auto insurance law requires that rates for insurance offered in the state be reasonable but adequate. At the same time they should not be excessive to the risks for which they apply, and definitely not unfairly discriminatory. The law also allows the insurance companies to give discounts to people with lower risk and freedom to charge a higher premium for high risk individuals. Following are some of the reasons which can cause your insurance premium to go up or come down.

Age and marital status: Lower age and ‘unmarried’ marital status can attract a higher premium as they are considered more risky drivers.

Driver’s driving record: No accidents or tickets in the past can avoid a penalty which is generally in the form of a surcharge.

Urban vs. Rural: If your car is kept in an area classified as rural you are likely to pay a lesser premium compared to when you keep it in an urban surrounding. This is because in the former case, the automobile is less prone to theft.

Make of your car: Flashy, expensive cars are more theft prone compared to their lower end counterparts and hence may translate into higher premium for its owner.