If the AI space awareness would be better there wouldn't be so much contact in the first place
When we are side by side it ignore us up to the point we get about a meter in-front of their car. Then they make a sudden move (often going off-track) to avoid us. LFS got a bad reputation in sim racing for it's AI mainly because of this little flaw. If that would be fixed I believe the experience would be much better.
Maybe a contact penalty would be interesting but it should be relative with the velocity of the contact. Sometimes a little touch isn't so bad and don't ruin the race of anyone so it shouldn't be penalized. Obviously if you make a little touch with the rear of, let's say, an FR, it's car will probably ended up spinning and you should be fine to go on with a free pass which should be enough to give you a penalty but no other games ever though of this yet as far as I know.
In some games you can just ram everything in first corner and get away with it. But don't ever cross the imaginary line on the side of the track cause you'll get a 10s penalty, even if that slows you down more than anything else. Whether you've been pushed out or not doesn't seem to matter (looking at you AC).