I have exactly same experience

The damage of my car was about $500. My insurance company contacted the other insurance company, and then I received a denial letter. The bad thing was that my insurance company did not want to spend more time to get the tiny $500 from the other insurance company. I ended up with filing a claim against my own insurance company, and got about $250 after deduction. Because $250 was so small, my premium was not increased.

The chance of winning in a small court is very small unless your have an independent witness, meaning the witness is not your friend or relative. I then also thought about small court. But finally I decided not to spend my effort to get $250. Basically, I did not have any witness, so I was not sure the chance of winning.