Yep, this is pretty much how it works. I can tell you, if he is trying to say that he had green and you ran a red, his insurance will almost certain deny the claim. I
Again, I stress that every state is different, but I am going to bet that your friend is correct. Since the officer would not rule on fault, your insurance company is going to proceed as if you are telling the truth and his insurance company will proceed as if he is telling the truth. This means that they each will deny the other's claim. This will force you both to turn it in under your own insurance costing you the deductable. They will then litigate the matter between themselves and most likely each will end up reimbursing the other. This is only going to occur because you are dealing with a property damage only claim. If either of you were alleging personal injury. The insurance companies would treat this matter the same. It would result in lawsuits being filed by each of you and a jury would decide fault and award damages. But in a property damage only claim, it is cheaper for each of your insurance companies to go ahead and pay for the other's vehicle than it is to fight over it. Court costs and attorney fees to litigate will be more than they will pay out to fix the vehicle. It's not fair, but it cutting your losses and going on. It's done every day in the insurance industry.