Teenager Verstappen swerved into Ricciardo on the first lap on the exit from turn two.
The contact damaged Ricciardo's vehicle, which was forced off track spilling oil.
Meanwhile, Hamilton and Kimi Raikkonen soon saw teammates, Valtteri Bottas and Sebastian Vettel, respectively, emerge right toward the front of the grid; their speed traps indicating much-improved pace as compared to a lacklustre morning session.
Despite Ricciardo's initial fury - with television images showing him flicking his middle finger at Verstappen from the side of the track - Horner said he calmed down later when his team-mate said sorry.
"You never want to see team-mates touch and get the result that happened today", Horner told Sky F1. It wasn't even a pass, it was a very poor mistake.
Ricciardo, a 2014 victor in Hungary, had been fastest in Friday practice and had hopes of a good result with a vehicle benefiting from aerodynamic updates and well suited to the circuit.
Ricciardo himself tweeted on Monday that he had moved on following discussions with Verstappen.
"There isn't an excuse for it", he said.
The Australian - who was fastest in FP1 and FP2 - managed one more turn before spinning out as his vehicle leaked oil on the track, and Verstappen expressed his regret over the incident. We will discuss the incident in de-brief this evening and me and Max will talk privately also and sort it out.
With Ricciardo's race over, Verstappen didn't escape unscathed as he was handed a 10-second penalty by the stewards. I don't think it's trying too hard.
"I'm sure the other teams will bring a bit more tomorrow, but I also think we have a bit more to find."
"Yeah, I think we can do it".
"It was out of my hands, you're never going to get that place back in Turn 2 the way it was". When Verstappen was confirmed as being responsible, he added: "F***ing sore loser".
It was the first time since past year s Monaco Grand Prix that Ricciardo had topped a free practice session.
A remorseful Verstappen said he would look to make amends with the man he has shared the Red Bull garage with since May 2016 as quickly as possible. They've got a great relationship.