I like the bad sport system, I got bad sport a few days ago and now that I realise what the assholes are like in bad sport lobbies I never want to go back. The bad sport is designed to split people between those that enjoy killing/fighting everyone in free roam and see it like one giant deathmatch and those who will fight, but don't want to do it all the time.
But the real good thing about bad sport is this: it stops insta-death.
The reason you have bad sport for car destruction is to prevent people killing you too quickly, either with a sticky bomb, rpg, grenade launcher, buzzard or tank. If people could do that without any negative consequence then they would. Without this system it would be too easy for high level people to massacre low level ones, crews could easily decimate smaller ones or individuals. It would make it too easy for people to kill one another. Also this system makes it more viable to have more than one person in a car, although that one car is taken out easily with sticky bomb etc, it will punish you for doing that.
The insurance payout on cars you destroy is just to stop people from not wanting to risk using their good cars. I save up for so long to get my adder, then cannot use it for fear it will get blown up by someone and I have to fork out 12k every time.
So why do so many have a problem with it?
TL;DR better to have car chases with people shooting smgs than just drive up, sticky, dead.