CAFM Risk Management 3 — Questions and Answers
Question 1: A telematics system flags a driver with a hard-braking score in the bottom 10% of the fleet. From a risk management perspective, the FIRST step should be:
- Immediately reassign the driver to non-driving duties
- Conduct a coaching session using the telematics data as evidence (Correct answer)
- Increase the vehicle's comprehensive insurance coverage
- Install additional cameras in the vehicle
Correct answer: Conduct a coaching session using the telematics data as evidence
Coaching with objective data addresses the root behavior and documents the intervention, forming a defensible risk-management record.
Question 2: Which risk transfer mechanism allows a fleet to share large, unpredictable losses with other organizations in the same industry?
- Captive insurance company
- Risk retention group (Correct answer)
- Excess liability policy
- Self-insurance fund
Correct answer: Risk retention group
A risk retention group (RRG) is a member-owned liability insurer that allows businesses in the same industry to pool and share liability risks.
Question 3: What is the purpose of an 'experience modification rate' (EMR or X-Mod) in fleet risk management?
- It measures fuel economy relative to fleet average
- It adjusts workers' compensation premiums based on actual loss history versus expected losses (Correct answer)
- It calculates the depreciation rate for fleet vehicles
- It scores driver behavior on a 100-point scale
Correct answer: It adjusts workers' compensation premiums based on actual loss history versus expected losses
The EMR compares a company's actual claims history to the industry average; an EMR above 1.0 increases premiums and signals higher-than-average risk.
Question 4: A fleet manager is evaluating whether to implement a dash cam program. Which risk management benefit is MOST directly achieved?
- Reduced vehicle depreciation rates
- Faster and more accurate claims resolution with visual evidence (Correct answer)
- Lower fuel costs through route optimization
- Automatic compliance with FMCSA hours-of-service rules
Correct answer: Faster and more accurate claims resolution with visual evidence
Dash cam footage provides objective evidence that speeds up claims processing and can exonerate innocent drivers, reducing fraudulent claims.
Question 5: Under a fleet safety program, what does 'near-miss reporting' primarily help the organization accomplish?
- Satisfy OSHA recordkeeping requirements for vehicle incidents
- Identify hazards and correct conditions before they result in an actual loss (Correct answer)
- Calculate driver performance bonuses accurately
- Determine the correct deductible level for auto liability insurance
Correct answer: Identify hazards and correct conditions before they result in an actual loss
Near-miss reporting is a proactive risk tool that surfaces hazardous conditions or behaviors before they cause injury or property damage.
Question 6: Which factor most directly causes an organization's auto liability insurance premium to increase at renewal?
- Increasing the number of vehicles in the fleet
- An adverse loss ratio from the prior policy period (Correct answer)
- Adding collision coverage to previously liability-only vehicles
- Implementing a new fleet telematics system
Correct answer: An adverse loss ratio from the prior policy period
An adverse loss ratio (claims paid versus premiums collected) signals higher risk to the insurer and typically drives premium increases at renewal.
Question 7: A driver is involved in a preventable accident while making a personal stop during a business trip. The fleet manager's liability exposure is BEST described as:
- No liability because the stop was personal
- Potentially full liability under the 'coming and going' rule if the detour was minor (Correct answer)
- Liability depends solely on whether the driver was on a company-owned vehicle
- Full liability because the employer is always responsible during business travel
Correct answer: Potentially full liability under the 'coming and going' rule if the detour was minor
Under 'respondeat superior' and 'frolic and detour' doctrines, minor personal detours may still expose the employer to vicarious liability if they are incidental to the business trip.
CAFM Risk Management 3
A telematics system flags a driver with a hard-braking score in the bottom 10% of the fleet.
From a risk management perspective, the FIRST step should be: