Re all the insurance and liability points mentioned above, I am not sure how it works here in Aust but as a US AOPA member I will just mention their advice re aircraft rental situations.
Certainly all possible issues/scenarios need to be carefully considered as several have mentioned PRIOR to even touching the aircraft.
If the owners policy covers absolutely everything and you can be put on it then you too will be fully covered same as the owner is.
If not then "renters insurance" is what US AOPA highly recommend ( and offer) as well as numerous other aviation insurance companies. Policies cover different classes and categories of aircraft and for a set annual price cover liability, damages, loss of use etc etc.
Very useful if you rent on a regular basis from a variety of individual people, clubs etc as even in the US most aero clubs, flight schools etc do not specifically cover rentals unless you have one of their instructors onboard.
So if the guy says yes you can rent his plane then calling a few av insurance companies may yield some useful info and possibly a reasonable rental policy.
Just a thought.
