Don't even believe (even though it is used as a public safety situation used-the law), that is a flat out lie, because the minimum liability coverage required by the state won't normally cover your medical and attorney bills. If you get hit by someone with minimum state required coverage. Texas just raised the limit last year to $60K. Statistics say one out of four is uninsured in Texas. So the law works well doesn't it?
All one needs to do is follow the money when it comes to impound. Who gets a kickback an sets the fees for the impound? States and local municipalities.
Who makes the laws? The states. Who is one of the biggest lobbyists? Insurance companies. Who fines you for not having insurance? The states. So can your car be impounded for not having insurance? Technically, your car can be impounded for just about anything and it is up to the cop's discretion as to what he/she is writing ticket's for.
Now, if your insurance has lapsed on the car, depends on the cop. Technically, he can have it impounded, or he/she can write a ticket for no proof of insurance and you can go to court showing them you do have insurance on the vehicle and the ticket is commonly forgiven and discharged. There is no set answer here.
Were there other mitigating factors that spurred you question, like driving under revocation or suspension? I have very rarely seen where the car was impounded just because proof of insurance was not shown. There is usually more to it than not just having insurance. Was there an accident involved?
Unlike the first person that answered your question, I am a little more cynical and find there were other factors involve that did not get mentioned.
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