There's clearly a limit to what it can do. It was likely designed on the assumption that cars would more or less be racing at the same speed, not some cars going around really slow while another car comes flying up next to it. In the specified crash, the BMW was already entering the turn on the racing line when the Capris was barreling down the straight. Now, David could lengthen the detection zone if he thought it was important, but at some point you end up in a situation where cars are barely ever on the racing line.
There's another one a few seconds later when the view changes, where the driven car is pushing another car into the turn. If you slow it down, you can see that the flipper switched, just not soon or fast enough to split them apart. Again, this will be down to the length of the detection zones.
I've yet to drive on a BLST track, but I expect it will work better when the cars are driven more equally/competitively. That said, it can't be perfect for every possible scenario. I bet it happens more than we realize, but most video editors take out crashes. ;-)