My guess is they would most likely appeal if the magistrate had awarded costs against them and, from what I read on the web for NSW local court hearings, that only happens when the magistrate decides that the prosecution effort was malicious or incompetent, or both. (Your legal team could confirm that or otherwise.)
In your case, from what you say, I think the magistrate gave the prosecution a free ride.
As for insurance companies, I reckon they will use any excuse to avoid paying up and the ambivalent nature of the magistrate's finding may encourage the other party's company to deny your claim and tell you to fight them in court -- knowing full well that it is uneconomical to do so.