To charge someone that need p/c. (Probable Cause). Since this is either petty or misdemeanor p/c could be easily attained. You need to stop...

What kind of Criminal Defense could my friend raise in this situation?

You are asking a question regarding Defense of Others as a justification for his actions. Based on the facts, it is highly doubtful that this...

Which law do we follow? Is the other at fault drivers insurance going to cover my damage?

The answer is Michigan. That is the situs of where the accident occurred. Consult with a lawyer in Michigan, it there is personal injury claim...