By law, the police must be informed when a collision involves damage exceeding...?

Answer: C — $2000

When a collision occurs, it is important to report it to the police if it involves damage exceeding $2000. This is because collisions involving greater amounts of damage can result in more serious injuries and significant property damage. Option A, $1000, may be incorrect because damage that is below this amount may not require police involvement. Similarly, options B and D may also be incorrect as they are lower and higher than the required amount of $2000. Reporting collisions involving significant damage allows the police to properly document the incident and potentially determine fault.