Texas law requires you to have auto liability insurance, and if you still owe money on your car, your lender requires that you also carry collision and comprehensive coverage. Auto insurance pays for damages, injuries, and other losses specifically covered by your policy.

If you drive in Texas, you must show that you can pay for accidents you cause. Most Texas drivers do this by buying auto liability insurance. Effective April 1, 2008, the minimum coverage amount required by the state's financial responsibility law increased to $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage. This new basic coverage is referred to as 25/50/25.

The limits prior to April 1 were $20,000 for each injured person, up to a total of $40,000 per accident, and $15,000 for property damage per accident. This basic coverage was called 20/40/15 coverage.

Basic coverage however might not be enough if you are held liable for an accident. You should consider buying more than the basic limits. When you buy an auto policy, your insurance company will send you a proof-of-insurance card.

You will have to show proof of insurance when you:

1. are asked for it by a law enforcement officer

2. have an accident

3. register your car or renew its registration

4. obtain or renew your driver's license

5. get your car inspected.

Texas law provides severe penalties for violating the state's financial responsibility laws. A first conviction will result in a fine between $175 and $350. Subsequent convictions could result in fines of $350 to $1,000, suspension of your driver's license, and impoundment of your automobile.

All household members should be disclosed regardless of their age.

You can learn more by visiting the state regulator's website.

You can get a car insurance quote here to see how much insurance would cost you.