When is Honesty... Not the best policy?

We say honesty, is the best policy.... but when does that "best policy"... go bad?

I have one friend who swears she is the most honest person around. She "tells it like it is" and if it offends people... "well that is their problem". I personally, don't agree with this. I feel that there is a time and a place for everything. If someone doesn't ask for your opinion... you shouldn't give it... regardless of if its good or bad.