Never lie to your insurance company. This is a good way to get your claim denied when you have a big claim. And when you have a big claim, they'll start checking into things that they haven't questioned for years, looking for an excuse.
Besides, the insurance rate isn't higher for a financed car. A financed car requires more coverage, which costs more than less coverage. The bank requires this higher coverage, not the insurance company, but if you tell the insurance company you are financing the car, they know what coverage banks require, so they quote you for that. And the bank will make sure you have the coverage.