That's a great question. I am pretty sure that your insurance (car owner) pays for the car, and of course you are both liable to litigation for properety damage/injury. Then again, some insurers may try to exclude liability if you're not the one driving your car. You may end up having to litigate yourself to get paid.
You are rolling the dice when you let a friend drive the car -- so don't do it unless you are very confident in your friend, well insured and realistically willing to accept the consequences.
For that matter, passengers have also been known to sue the driver for injury. Yep, your 'friend' in the passenger seat may want money. I know of a 'friendship' that ended that way.
Be careful who you let in your car, let alone drive it. It's sad that our culture has become so sue-happy, but it's going to get worse before it gets better