Right - got an answer to this from the Met Legal team. In summary, it's complicated and a bit of a minefield.
They don't believe that the owner of the car has to have 3rd party insurance for someone else to drive it BUT they do stress that the owner has to be sure that the third party does have the correct cover. As the correct cover solely depends on the individual contract the policyholder has with their insurer then there is simply no blanket answer and they strongly advise that the owner personally confirms with the relevant insurer that adequate cover is in place.
If they see a car being driven that, according to the database, has no insurance then they will stop it and ask for documents to be produced. If the driver has the requisite cover then they are happy that they have committed no offence. Strictly speaking the owner might have done (by not checking) but the courts are more concerned with the driving of the car and so generally no further action would be taken.
If the car is parked or is otherwise unattended then an offence has been committed. So if the insured driver parks the car and leaves it, then the police check it and find it's not covered, then the owner can be penalised or prosecuted and the car impounded.
If the driver can't prove they have the required cover then they will penalise or prosecute the driver. The owner will also be deemed to be at fault, for allowing the vehicle to be used without adequate insurance.
So, to be on the safe side, you have to personally check your friend's insurance covers them driving your car and also ensure they don't leave the car unattended on a public road.
