The Association of British Insurers (ABI) is advising young drivers to be honest with their car insurance provider - or face the consequences.
Some newly-qualified drivers buy a "fronting" policy, whereby they claim that their parent is the main driver and that they themselves only use the vehicle occasionally.
However, this can end up costing them far more in the long run if the insurer finds out the truth, the ABI said.
Malcolm Tarling, the ABI's general insurance expert, said that misleading a policy provider could mean claims are not met, and an increase of the cost of cover in future.
"If you think you are saving money now, it's 0 economy because you will be spending more for many years to come," he said.
The ABI says there is a range of deals available to young drivers to make car insurance more affordable.
Mr Tarling urged recently-qualified drivers to shop around when it comes to both insurance and the type of car they wish to buy. Insurers class cars into 20 groups, with a significant difference in the cost of insuring a vehicle depending on its group.
Drivers aged between 17 and 25 have to pay more than twice the national average for car insurance than their older counterparts, according to research for comparison website uSwitch.
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