Drivers making fraudulent claims and uninsured drivers cost other motorists £1.25 billion annually, it has been claimed.
Research by The Co-operative Insurance found that claims made by fraudulent and other uninsured drivers resulted in an extra £50 a year that an average UK driver had to pay towards car insurance policies.
The insurance firm said that young drivers were among the worst offenders, with one in four of them admitting to driving either without any insurance coverage, MOT test certificate or a licence over the last year.
The company said that higher premiums reflected costs to cover additional risks, for instance, the payouts to more than 23,000 people killed or injured by the actions of uninsured drivers each year.
It estimated that the extra charge is equivalent to the cost of 52 days of insurance coverage for an average motorist.
Tim Franklin, chief operating officer at The Co-operative Financial Services, said: "Millions of people are deliberately flouting the law by not insuring their cars at massive cost to honest road users and the wider insurance industry posing an unnecessary and unjustified risk.
"Whilst work is continuing to be done to highlight the dangers of uninsured drivers and keep them off the UK's public highways by the police, road safety groups and the insurance industry there is clearly more to be done."
Katie Shephard, spokesperson for national road safety charity Brake, said: "It's shocking that so many young people are admitting to driving illegally.
"Young people are involved in a huge proportion of deaths and serious injuries on our roads due to their inexperience and the tendency of many young drivers to take risks like speeding, overtaking dangerously and drink and drug driving."
