Senior Sergeant Chris Blackford recounted recent accidents, one which involved the driver of a motor home who failed to give way and hit a local driver's vehicle, and another where a vehicle hit parked cars.
Snr Sgt Blackford said the young people whose vehicles were damaged were innocent parties who did not have full insurance, and in both cases the drivers of the other vehicles were from overseas.
The young people had third-party insurance, which covered damage to other vehicles, but would not cover the owner's vehicle.
This concerned Snr Sgt Blackford, as the offending drivers could easily return home and avoid paying court-ordered reparation.
In general, victims had a "low chance" of receiving any money, he said.
Police could recommend drivers at fault be charged with careless driving but the charge did not carry a prison sentence and offenders were "free to leave the country as they wish".
He also worried uninsured drivers were leaving themselves open to significant debt if they caused damage to another vehicle.
Victims of accidents and those who had caused damage were often "not wealthy people", who lived in rural areas and sometimes could not afford to replace their vehicles.
"It's quite sad when you see those young people out there looking for work ... and now they can't do that.
"The community as a whole suffers, because they probably have to go on some kind of benefit.
"There's a bizarre situation where insurance is not compulsory."
The research and testing manager with Consumer, Hamish Wilson agreed and said at the very least New Zealand should initiate mandatory third party insurance, since it would mean damages were "sorted more easily".
"There are a lot of cars worth $50,000-60,000 on the road and if you hit one and do a substantial amount of damage, then you have to pay for it.
"We know that there's always been a lot of people driving around in cheaper cars not having it [full insurance] but we don't have any statistics.
"All we know is the problem is out there."
He suspected Queenstown and other tourist areas were worst hit by uninsured drivers because "it's easy to come out here and buy a cheap car, and if you leave the country, you can leave the bills".
Insurance Council chief executive Chris Ryan said the issue had been around for a long time in the tourism sector.
"How do you require a visitor to pay their obligations to New Zealand while they are here?"
While visitors with debts owing were acting illegally by leaving the country, he said the issue was "very hard to resolve".
He disagreed New Zealanders were lacking insurance but encouraged all drivers to invest in comprehensive insurance.
A Ministry of Justice spokesman said if a person appeared in court and was ordered to pay reparation, they were given 28 days in which to do so.
"If a person does not pay, a warrant may be issued for their arrest and they can be prevented from leaving the country."
