A driver assistance system for a vehicle includes a forward facing and a control having an image processor that processes image data captured by the camera. At least in part responsive to processing by the image processor, an alert to a driver of the equipped vehicle is generated based upon at least one of (i) detection of an inappropriate lane change maneuver of the equipped vehicle and (ii) a detection of a potential impact with another vehicle. The image processor processes image data captured by the forward facing camera to detect a traffic control device present within the field of view of the forward facing camera, and the system may generate an alert to the driver when it is determined that the vehicle is not appropriately responding to the detected traffic control device.