What happens when you finance a vehicle for a friend. You then have a falling out, but the vehicle is either in your name or both names. Do you carry insurance for it? Are you required to? Can you have the other person sign some document that says they are responsible for any damages?
First, you NEED insurance on the vehicle. The owner of a vehicle can be held responsible for up to $15,000 for injuries sustained by someone driving their vehicle. If the other person does not have insurance, the injured person will come back to you. It is not worth the risk.
Also, if the other person lets someone else drive the vehicle, that person may not have insurance. Then, again, the injured person will come back to you.
You should call the other person’s insurance company and have your name added as an “additional insured.” If they won’t do this, then get your own policy ASAP. You do not want to be sued because you do not have insurance.
As for the document that they sign. The document you drafted probably does not have any legal authority. Don’t count on that protecting you!