AIDS is one of the deadliest diseases in the history of humankind caused by HIV. Despite the technological development, curtailing the viral infection inside human host still remains a challenge. Therapies such as HAART uses a combination of drugs to inhibit the viral activity. One of the important targets includes HIV protease and inhibiting its activity will minimize the production of mature structural proteins. However, the genetic diversity and the occurrence of drug resistant mutations adds complexity to effective drug design. In this study, we aimed at understanding the drug binding mechanism of one such subtype, namely subtype C and its insertion variant L38HL. We performed multiple molecular dynamics simulations along with binding free energy analysis of wild-type and L38HL bound to Atazanavir (ATV). From the analysis, we revealed that the insertion alters the hydrogen bond and hydrophobic interaction networks. The alterations in the interaction networks increase flexibility at the hinge-fulcrum interface. Further, the effects of these changes affect flap tip curling. Moreover, the changes in the hinge-fulcrum-cantilever interface alters the concerted motion of the functional regions leading to change in the direction of flap movement thus causing a subtle change in the active site volume. Additionally, formation of intramolecular hydrogen bonds in the ATV docked to L38HL restricted the movement of R1 and R2 groups thereby altering the interactions. Overall, the changes in the flexibility of flap together with the changes in the active site volume and compactness of the ligand provide insights for increased binding affinity of ATV with L38HL.