If you increase the Drivatar difficulty you'll find yourself in races against players who don't use other cars to corner but you'll still see the rad parts of Drivatar, like aggressive defending of a lead or shunts at the apex of a turn (which aren't the same as the side-swipe on a hairpin). You'll also earn more credits in your races because you'll get the percentage increase.
That said, even on the higher difficulties you'll still wind up in some crashes when a drivatar makes a mistake and uses your side panels to fix it up. I don't think this is entirely unrealistic though.