Update
Last Friday I came home and the friend (lets call her X) had borrowed the car again. She had asked my H not me.
When she brought it back the day after she had put petrol in it.
I spoke to my H about the insurance situation and he says he thinks she is OK to drive it as a third party. I could not convince him otherwise.
I said 'What if she has an accident'. He said, 'Well the car has little value so I'm not bothered'. Not a good answer.
I said she was being cheeky and he said 'Well maybe we should sell the car' - though when this is likely to happen, goodness knows.
We saw X and her H over the weekend at a BBQ. X seems to think that her BBQ invites are fair exchange for borrowing the car. She more or less said this directly. We also had them over for a BBQ this weekend, so that cancels that theory out, in my opinion.
H mentioned, whilst she was there with her H, that we were going to sell the car. She made no offer to buy it. I think this is because she knows there is an electrical fault that could cost money to fix.
As I said previously, I am very non-confrontational, and wouldn't want to lose X's friendship as, apart from the car thing, we get on quite well.
Hopefully, the car will be going up for sale soon.
Thanks for all of the advice, I really appreciate it and all the time you have all taken to respond.