We have damage in the FIA races, it doesn't do anything to change people's behavior. It's a minor annoyance at best.
Personally, I am all for damage because I love the spectacle of it and it was in car games over a decade ago. Seems grossly neglected now. That said, it won't stop people from driving into you. People crash into you for three reasons.
1 - They suck - Plain and simple they aren't very good and they hit you. Sucking isn't dirty, it's just sucking. The game is open to a wide public from preteens, to retirees, to those less than sober and less serious about their racing.
2 (A) - They are intentionally hitting you to gain an advantage. It's not that hard to give someone a tiny bump, or a spin, or run them into the grass without even losing much time, much less incur a penalty, or trigger damage. If someone is a "dirty" driver, they are getting good at being dirty.
2 (B) - They are intentionally hitting you out of anger. I'm guilty of this one and I believe many are. When the red mist comes, no one cares about penalties or deterrents.
I have suggested lack of inclusion, but that seems to trigger people getting upset, yet exclusivity is how every other sport is run. Do you want to play a recreational sport? Pay a fee. No fee, no playing. We have a "fee" system in place with the DR and SR, except it's way too easy to have a high SR. If people have to REALLY earn SR, that will help. Then, use SR to keep people out of ranked matches.
Daily RACE A = Any SR
Daily RACE B = SR A or higher
Daily RACE C = SR S only
This does the same as a black flag or damage, except it removes the player from the event BEFORE the damage is done. If someone wants to play a daily, they'd better behave themselves. But, like I said, SR-S is far too easy to gain and maintain.