Instead of during phone call mute yes/no, offer more options:
* no muting
* mute notifications (but offer normal driving directions)
* shorten directions (no TTS, no and then...)
* audible signal only (ring light bell when maneuver is upcoming and stronger bell when maneuver must be made)
* mute all

This will allow the driver to choose to get some form of navigation during phone calls, but which is still less intrusive to the phone call than usual.