Insurance firms are worried the high number of young drivers without insurance face huge costs if they crash.
Research from the Commission for Financial Capability showed only 59 percent of drivers aged between 18 to 34 have car insurance due to the high cost of policies.
Insurance Council chief executive Tim Grafton said young people were not aware of the financial risks of crashing without any cover.
Mr Grafton said insurance cover for young drivers or first-time car owners could cost up to $400 a year.
Some may feel that it was not worth getting even third-party insurance because their car was old or cheap, he said.
"The problem in not having third-party insurance for fire and theft is that you could crash into another vehicle - a $500,000 Maserati, and you could be liable for that cost."
Commission for Financial Capability personal finance editor Tom Hartmann said New Zealand should introduce black box technology that records individual drivers' perfomance and rewards good driving with low premiums.
"Internationally we're seeing the use of devices in order to give a more accurate idea of how good a driver a young person is, and you know we've seen them save the cost of insurance of up to 40 percent on those premiums."
Drivers who crash and do not have insurance could face long running debts too, he said.