According to California state law, which is similar to most states, every owner and driver of a car must maintain financial responsibility (insurance). If your friend was in an accident that was their fault the vehicle's insurance (thus you as the owner) would be primary. If the vehicle did not have insurance the person hit could go after you, the owner, personally for the cost of repairs, etc.

Your friend's non-owner SR22 will be secondary on whatever vehicle he or she drives. So your friend will need to make sure that the vehicle has insurance on it as well.