Hi mtf53,

While this practice is common with homeowner loans and insurance, I am not aware of it occouring with car loans and insurance. You should check with your insurer to determine their policy on canceled insurance.

Do note that not having insurance will likely be considered an act of default, which means that if they find out about it, the lien holder could "accelerate" the loan, calling the balance due. Thus it is important to get this matter resolved as soon as possible.