We’ve all been in this position when shopping for a car — you see the perfect car, at the perfect price, but it’s actually not quite perfect. It’s an automatic instead of a manual. Does this matter? Well, in terms of insurance it could do.
With lots of different models of cars coming in both automatic and manual options, it’s worth knowing if choosing one or the other will affect your car insurance quote.
Are automatic cars more expensive to insure?
Insurers use hundreds of rating factors to offer tailored car insurance quotes, including car type. The two main factors we’re considering here are gearbox type and licence type. Automatics can be more expensive to insure due to higher claims costs and automatic gearboxes cost more to replace than a manual.
Does a car’s gearbox type affect your insurance?
Obviously the make, model and engine size of the car makes a big difference to your quote, but what about the gearbox in the car? The Admiral Pricing Team did some research on this by looking at the average premium for both automatics and manual cars.
Interestingly, we found the average premium was 5.63% higher for automatic cars. This seemed to be mostly driven by the increased costs of an insurance claim for an automatic and also an increased claim frequency.
The increased cost of a claim may be down to the extra cost of replacing an automatic gearbox compared to a manual gearbox, or, it may be because automatics are often higher specification vehicles.
Either way, the average premium difference between manual and automatic was not considerable meaning there might be other factors leading people to believe automatics cost more to insure.
Does licence type affect your insurance?
Driving licence type is also a rating factor, so let’s look at how licence type affects your car insurance quote. As you can see from the data above, the average premium for drivers with an automatic licence is a massive 43.89% higher than drivers with a full licence.
This seems to be down to a claims frequency that is 19.23% higher than those with a full licence. Average claim cost is roughly the same across all licence types; this implies automatic licence holders are more likely to have an accident than those with a full licence.
So, our analysis shows if you hold a manual licence (which most drivers do) you would only pay, on average, around 5% extra on your insurance if you chose an automatic version of the same car.
However, if you opt for an automatic licence when you are learning to drive you are likely to pay 43% more for your insurance. Over a lifetime of driving, this could be a considerable extra cost.
A manual or automatic transmission is not a variable in auto insurance rating schemes.
There are a number of factors that significantly impact the rate one pays for car insurance. That question has been asked and answered a number of different ways on Quora. Below is one of the responses I previously provided:
Every company weighs factors differently using complex rating schemes that are proprietary and unknown to the consumer. There are however some factors that are frequently used that make for significant differences in premiums between auto insurance buyers.
Here are some of those factors ranked in what I see as having a major versus less than major impact on auto insurance rates:
Credit History or more specifically — Insurance Score
Your insurance score is closely related to your credit score. Improving this score can be one of the most influential factors to what you will pay for insurance going forward.
States that do not allow the use of Insurance Scores: California, Hawaii, and Massachusetts.
Claims frequency is more important than driving record. Most insurance companies have rating schemes that reward those who do not have claims. Read that to also include surcharge or remove discounts for those who do.
Driving record, specifically violations are less of a factor than they used to be. A poor driving record in combination with a poor insurance score and claims history is a recipe for very high insurance rates.
Continuous Insurance Coverage
Yep. Not maintaining proper insurance coverage can mean a big difference in what you pay for insurance.
In some areas of the country, where a car is principally garaged can make a huge difference in your auto premium. An extreme example can be seen in the state of Michigan. The Insurance Information Institute reports the average cost of an auto insurance policy in Detroit is $10,723. The whole state of Michigan averages $1,131 for the same policy.
This can be a ‘major factor” if a driver is under the age of 25. The younger the driver, the more expensive rates will be. If the young person is deemed a “primary” operator, the increase in premium can be as much as 3-fold.
Gender has little impact on auto rates but for youthful operators. Boys pay more than girls especially during the teen years. Once an adult, gender has little influence on auto rates.
Years of Driving Experience
Years of driving experience impacts:
Drivers who first choose to drive
International operators entering the country
Most companies will add what is called an inexperienced driver surcharge to those with less than three (3) years driving experience in this country.
Data on every Make, Model and even Sub-Model of vehicles is collected and parsed to determine those cars that are safer, cost less to repair and have lower incidents of theft.
These statistics impact auto insurance rates for all coverages in today’s rating schemes.
Coverage Limits — Comprehensive & Collision Deductibles
It may go without saying that the better your coverage, the more you will pay. That is true, but it may surprise you how little an extra “layer” of liability, uninsured motorist and personal injury protection will cost.
However, there are significant differences between the minimum coverage limits required by law — and — those that reflect more responsibility.
Less Important Factors:
A few companies will adjust rates based on higher risk occupations and discount rates slightly for less risky careers.
There are some companies that will provide a break on premium based on your education level. Those levels may include; no high school, high school, some college, college degree, masters or PhD completion.
Previous Liability Limits
Yes. There are companies that will provide a better rate to those who have carried higher liability limits on their previous insurance contract.
Not a significant factor. With many companies not a factor at all.
Vehicle use was a big factor in auto rates for many decades but has taken a back seat to the other variables above.
Miles driven annually
Some companies still provide minor discounts for low mileage but fewer increase premiums because of long commutes. Not a major factor with many companies.
So there you go.
Those are some of the factors, major and otherwise, that influence your auto insurance premium.
If you are seeking sound strategies that you can employ to reduce your auto insurance focus on those that you can control. This information is key to making a difference in your rates going forward.
Related QuestionsMore Answers Below
Why are manual cars faster than automatic cars?
Which is safer, a manual car or an automatic car?
When the insurance pays me for the damages on my car, do I have to repair what they have paid me for?
What is the term for a manual/automatic car?
Who pays the car insurance?
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Answered Mar 23, 2018
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