Manual vs Automatic Car Insurance: Which One Costs More?

4 min read | Updated on July 21, 2025, 16:10 IST

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Instagram is full of reels comparing manual and automatic cars. Some of them are informative, and some are too hilarious. From calling names to questioning the ‘masculinity’ of automatic car drivers, these reels are extremely funny. Manual cars are also trolled, citing ‘constant ankle pain’ and ‘budget-friendly’.

Irrespective of all the trolls and fun, selecting your car’s transmission boils down to personal choice and preferences. Each transmission has its own set of pros and cons, and there is no one-size-fits-all criterion. Automatic options are generally more expensive than their manual counterparts. The mechanisms (such as the gearbox and clutch) of the two variants are also distinct. This is why people often wonder if the motor insurance for these cars would be similar or different.

Let us understand everything about manual and automatic car insurance.

Manual vs Automatic: Key Differences

Before we go any further, let us understand the key differences between the two car variants:

Feature	Manual	Automatic
Cost	Cheaper than Automatic	Higher than Manuals
Technology	Simpler mechanical gear system	Complex system (e.g., CVT, torque converters)
Ease of Driving	Requires clutch control, not ideal in traffic	Easier to drive in urban and stop-and-go conditions
Maintenance Cost	Lower repair and maintenance expenses	Costlier repairs due to complex components
Insurance Impact	Lower IDV and lower repair risk result in lower premiums	Higher IDV and risk perception result in higher premiums

How Transmission Type Affects Insurance Premiums

As underlined before, the cost of motor insurance for automatic cars shall be slightly more than that of manual ones. This is how the transmission influences the insurance premiums:

Vehicle Cost and IDV (Insured Declared Value)

Automatic cars usually cost more than manual ones. This higher market value directly increases the IDV of the car, which is the amount an insurer promises to pay in case of total loss or theft. This leads to higher premiums.

Repair and Replacement Expenses

Automatics come with advanced transmission systems, more expensive to repair or replace. For example, fixing or replacing an automatic gearbox can cost twice or more than a manual gearbox. This leads to higher premiums.

Risk Perception and Driving Behaviour

Automatic cars are often bought for convenience, especially by new or less experienced drivers. This demographic is statistically more likely to be involved in minor accidents or mishaps. This leads to higher premiums.

Claim Frequency and Maintenance Reliability

Manual cars are simpler and more reliable mechanically. Fewer breakdowns and lower repair needs often translate into fewer claims. This leads to lower premiums.

Is the Premium Difference Significant?

There are multiple reasons why owners of automatic vehicles need to pay a higher motor insurance premium. However, the difference is not too great. For budget-friendly hatchbacks, the premium gap between manual and automatic versions might be just a few hundred rupees annually.

For sedans, SUVs, and other premium cars, an automatic transmission might come with advanced systems, thereby increasing the total cost of the vehicle. In such cases, the premium amount can be significantly higher (up to a few thousand rupees).

However, it is important to understand that transmission alone does not play a decisive role in fixing the premium. It depends on various other factors such as the car model, engine size, location, driving history, and insurer policies.

Tips to Reduce Insurance Premium

Let us consider a few tips that will help you reduce the insurance premium, irrespective of the transmission type of your vehicle:

Install Safety Devices

Anti-theft alarms, dash cams, and GPS trackers can fetch discounts.

Opt for Voluntary Deductibles

Agreeing to pay a small portion of the claim upfront reduces your premium.

Maintain a Clean Driving Record

A clean driving record with no traffic violations or claims can result in a higher NCB and lower renewal cost.

Compare Online

Use aggregator platforms like Upstox to compare quotes and find hidden deals.

Regular Maintenance

Well-serviced cars are considered lower risk, with fewer chances.

Summing up

The decision to choose between a manual and an automatic car depends on your preferences. Both transmissions have their sets of pros and cons. However, if you are a cost-conscious customer, you should also know that the decision will affect your premium amount. Automatic transmission vehicles are slightly more expensive than manual transmission vehicles. Hence, the motor insurance premium payable can be marginally higher. You should consider different tips to reduce your insurance premium, such as driving safely and installing anti-theft devices.

FAQs

Does an automatic car always have a higher insurance premium?

Not always, but it's usually higher due to higher cost and repair expenses.

Why do insurers consider transmission type while calculating premiums?

It affects the car’s value, repair cost, and risk perception.

Can I reduce premium costs for my automatic car?

Yes, you can use safety features, increase deductibles, and maintain a claim-free record.

Is the premium difference huge between manual and automatic cars?

For most cars, the difference is modest, more significant in higher-end models.

What else impacts my car insurance premium?

Location, car model, age, IDV, claim history, and add-ons.

About Author

Upstox Desk

Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.