I cannot tell you what exactly will unfold in your situation, but I do urge you to confer privately with an attorney as to this matter. Here is a link to Minnesota statute that addresses how with regard to a collision, an authorized driver (the 'operator') is deemed an agent of the owner: https://www.revisor.mn.gov/statutes/?id=169.09 https://www.revisor.mn.gov/statutes/?id=169.09
MINNEAPOLIS/ST. PAUL and outlying areas to ST CLOUD. Do seek legal counsel for your personal legal issues and needs. This post is not legal advice and does not create an attorney-client relationship. This post is to be considered general information which may or may not apply to your personal situation.
If you had not cancelled your insurance maybe they will defend you. In any event, you should consult a lawyer. If you get sued the contract or bill of sale will be an important document. The buyer obviously lied to you, so I am optimistic you will be ok. Next time you take the other party down to Secretary of State and transfer the title. Good Luck!