insurance company liquidating, will have to pay double

My hubby is a black cabbie, so has public liability insurance. He took out a policy in June, and opted to make monthly payments. He signed a deal where the first month was £240 then 9x £120 monthly payments are due and then it is paid out for the year. We were informed about a month ago that the insurance firm is liquidating, but to do nothing as of yet and wait to be informed as to what the next step is. We had a phone call today to inform us that the he will be insured until 26th Oct. They can recommend another insurance firm who will give him the same deal that he had now. However because he took the pay monthly option he still has to continue paying the £120 a month for the original policy until the end of the contracted period because the policy has been paid in full by a loan company and our agreements are for payments to the loan company and not the insurance company. So he will have to pay the rest of the existing 'loan' and pay for new insurance on top. They advised we may get some of the money back but I realise that we might not. It feels like we should stop paying, but were informed today that we would have debt collectors involved if we just stopped paying. Has anyone experienced anything like this, and is there anything we can do to get out of this, as paying double is going to cripple us