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This type of contract
is fine and is legal. The problems you run into is that if there is an accident you can be held liable for excess damages, which is why you need to insist on an insurance policy with limits that would prevent an excess judgment. Typically $500K or $300K limits are sufficient for most all actions.
You would be liable for any parking tickets as the owner of the car, since those go to your license. The only way to avoid that would be to transfer the car over to him so he can put it into his name, which is not really what you want to do here. The contract that you would have, of course, would contain a statement that he would indemnify you for the fines and any excess judgments, but that would still not help you being liable initially and would mean you would have to sue him if he does not pay to reimburse you or indemnify you and then if he goes bankrupt you would be liable for the payments without any recourse against him.
This is why you do not see this done very often.
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