A red line appeared in the middle of my iMac screen

Likely a GPU failed. Please take the computer to your local Apple Authorized Service Provider ( Apple Authorized Service Provider Locator (AASP) & Genius Appointment ) to be professionally diagnosed. If it is the GPU, then it's time to replace the computer as the GPUs on machines made in the past 10+ years are a which on the main logic board that is not replaceable . And a new main logic board (assuming your computer is not obsolete) is very expensive.

However, if the computer is covered by AppleCare then that repair would be covered in your AppleCare.

No, no harm at all however PLEASE ensure you have a current Time Machine back and keep it current as your computer could die at any point. It's a good time to buy a replacement due to Black Friday though so that is something to consider.