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    You MUST keep the car insured at all times - if it means overlapping the insurance then do it that way. I'm not sure if the car is in your name, as that's not clear - if that ius the case, then it must stay insured in your name as long as the finance is in your name. I hope that answers your question.
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    Frankly dude you are screwed in the matter, and I would not cancel the insurance either, keep it and make them pay you for it, if they fail to get insurance or decent insurance then if something happens you are going to have a hard time. The dealership also won't sommer take a car back unless there is actual issue with it. Either you must sell the car, i.e to another party or make them get their own finance, else make the best of this bad situation and put between you and your friend a proper contract.
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