Teenage drivers are being urged to reign in their reckless driving habits after a recent study shows they are crashing at an alarming rate.

Insurance companies are warning parents about the potential costs of teenager's driving.

A University of Otago study found a quarter of teenage restricted drivers are crashing while also routinely breaching the terms of their driving licence.

The study of 893 teenagers with restricted licences shows more than 80 per cent broke licence conditions, 81 per cent admitting to driving with passengers while unsupervised and 65 per cent driving unsupervised at night. Of this number, 218 have been involved in crashes.

Undertaken by three staff from the University of Otago's injury prevention research unit and one University of Auckland staff member, the report also highlights the important role parents have to play in teenagers learning to drive.

Those in the study with parents who knew little about licence conditions were more likely to break the rules.

As a result, insurance companies are warning parents about the potential costs of teenager's driving with the Insurance and Savings Ombudsman Scheme investigating a number of complaints about motor vehicle insurance claims involving teenage drivers.

Insurance and Savings Ombudsman Karen Stevens tells parents if their teenager is breaching the terms of their licence and has an accident, they will not be covered by insurance policies.

If an insurance policy is void, and young motorists are found to be at fault, they are liable to pay for repairs to their car and the one they hit.

'We have seen many instances where teenagers and their families have faced large bills for the damage caused when the teenager was involved in an accident driving in breach of their licence.”

As a mother, Karen appreciates the difficulty to get the message across to teenagers, but as the study shows teenagers are more likely to crash.

'Make sure your child realises that if they drive at night or with passengers in breach of their licence they will face the bill for any damage. Your insurance will not cover your car or anyone else's that is damaged.”