Cancelling the insurance was probably not a good idea. Whether you are liable is dependent on a number of factors and cannot be answered quite yet. You probably should have spoken to an attorney about this before proceeding. Regardless, you can call the police station to report the car stolen and proceed from there.
Nothing in this communication should be considered legal advice. Nor should this communication lead you to believe that an attorney-client relationship has been created. Only after thorough analysis of your case with you in my office can I provide effective legal advice on your specific issue.