You are talking about two different issues here: 1> whether your friend violated traffic rules; 2> whether he is liable for damages caused by the accident.
A judge may dismiss your friend's case about the traffic ticket; however, the outcome didn't exempt him from tort liability. Case dismissal may be based on different grounds, such as police officer didn't show up, officer didn't have sufficient evidence to prove your violation of the traffic rules, etc. The fact that your friend was not in violation of traffic rules when the accident happened doesn't equal to that he is not liable for the damages.
If there is a suit between your friend and the other party involved in the accident, disputing about who should be liable for the damages, and if a Judge ruled that your friend is not responsible for the accident, then he is free from liability. However, such lawsuit is usually expensive. In many cases, insurance companies don't want to be involved. If your friend doesn't have solid evidence showing the other party's fault and he was the driver who hit the other party, it is common that his insurance company would pay for the other party.
Insurance companies are very cunning. If they have a clue that their client may not be responsible for the accident, they would not pay.