CAFM Risk Management — Questions and Answers

Question 1: Which document formally transfers liability for a fleet vehicle to a third-party vendor performing off-site maintenance?

Certificate of insurance
Hold harmless agreement (Correct answer)
Vehicle title transfer
Maintenance work order

Correct answer: Hold harmless agreement

A hold harmless agreement contractually shifts liability to the vendor while the vehicle is in their care, custody, and control.

Question 2: A fleet manager discovers that 15% of drivers have undisclosed moving violations from the past year. The BEST corrective action is to:

Terminate all affected drivers immediately
Implement a motor vehicle record (MVR) monitoring program with automatic alerts (Correct answer)
Increase insurance deductibles to offset risk
Require all drivers to complete a one-time defensive driving course

Correct answer: Implement a motor vehicle record (MVR) monitoring program with automatic alerts

Continuous MVR monitoring catches violations as they occur, enabling timely intervention rather than annual surprises.

Question 3: In fleet risk management, 'frequency' and 'severity' are used to:

Calculate fuel consumption averages
Prioritize which risks to address first using a risk matrix (Correct answer)
Determine preventive maintenance intervals
Set driver pay scales

Correct answer: Prioritize which risks to address first using a risk matrix

A risk matrix plots frequency (likelihood) against severity (impact) to help fleet managers allocate resources to the highest-priority risks.

Question 4: Which type of fleet insurance coverage pays for damage to the fleet vehicle regardless of who is at fault in an accident?

Liability coverage
Collision coverage (Correct answer)
Uninsured motorist coverage
Gap coverage

Correct answer: Collision coverage

Collision coverage pays for physical damage to the insured vehicle from an accident, regardless of fault.

Question 5: A fleet manager wants to reduce the financial impact of high-frequency, low-severity claims. The MOST cost-effective strategy is typically to:

Purchase additional umbrella liability coverage
Self-insure or retain those losses with a higher deductible (Correct answer)
Outsource all fleet operations to a third party
Require drivers to pay for minor damage out of pocket

Correct answer: Self-insure or retain those losses with a higher deductible

High-frequency, low-severity losses are predictable and often cost less to self-retain than to pay premiums for insuring them.

Question 6: Which federal regulation requires employers to verify commercial driver's license (CDL) status and driving history before hiring?

FMCSA 391.23 — Investigations and inquiries (Correct answer)
OSHA 1910.178 — Powered industrial trucks
DOT 49 CFR Part 382 — Drug and alcohol testing
EPA 40 CFR Part 80 — Fuel standards

Correct answer: FMCSA 391.23 — Investigations and inquiries

FMCSA 49 CFR §391.23 requires motor carriers to investigate each driver applicant's employment history and driving record.

Question 7: Post-accident drug and alcohol testing under DOT regulations must be completed within what timeframe for alcohol?

2 hours (with an 8-hour limit for testing) (Correct answer)
24 hours
48 hours
72 hours

Correct answer: 2 hours (with an 8-hour limit for testing)

DOT regulations require post-accident alcohol testing as soon as practicable but within 2 hours; after 8 hours, testing must be abandoned.

Question 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: 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.

Question 15: When developing a fleet risk management program, which step should occur BEFORE purchasing insurance?

Selecting an insurance broker
Identifying, analyzing, and evaluating all fleet exposures (Correct answer)
Negotiating deductible levels with underwriters
Reviewing prior-year premium invoices

Correct answer: Identifying, analyzing, and evaluating all fleet exposures

Risk identification and analysis must precede any risk financing decision so that coverage is properly structured to match actual exposures.

Question 16: A fleet vehicle is stolen and later recovered with significant damage. Which coverage would pay for repairs to the organization's vehicle?

Liability coverage
Collision coverage
Comprehensive coverage (Correct answer)
Uninsured motorist property damage

Correct answer: Comprehensive coverage

Comprehensive coverage pays for non-collision losses including theft, vandalism, fire, and weather damage to the insured vehicle.

Question 17: Which metric is MOST useful for benchmarking fleet safety performance against industry peers?

Total fuel cost per vehicle
Accident rate per million miles driven (Correct answer)
Average vehicle age in the fleet
Preventive maintenance compliance percentage

Correct answer: Accident rate per million miles driven

Accidents per million miles normalizes for fleet size and utilization, enabling valid comparisons across organizations of different sizes.

Question 18: What is the primary purpose of an indemnification clause in a fleet vendor contract?

To specify payment terms for fleet services
To allocate responsibility for losses and legal costs between the fleet and the vendor (Correct answer)
To define the vehicle maintenance schedule
To establish fuel reimbursement rates

Correct answer: To allocate responsibility for losses and legal costs between the fleet and the vendor

Indemnification clauses contractually assign financial responsibility for claims, losses, and legal expenses to the appropriate party.

Question 19: A fleet manager notices that rear-end collisions represent 40% of all accidents in the fleet. The risk control tactic MOST likely to reduce this specific type of loss is:

Implementing a no-personal-use vehicle policy
Mandating following-distance training and monitoring via telematics (Correct answer)
Increasing comprehensive insurance deductibles
Restricting vehicle access to drivers over age 25

Correct answer: Mandating following-distance training and monitoring via telematics

Rear-end collisions are primarily caused by following too closely or inattention, both directly addressed by following-distance training and telematics monitoring.

Question 20: Which document should a fleet manager require from every contractor who operates company vehicles on behalf of the organization?

Personal auto insurance declarations page
Certificate of liability insurance naming the company as an additional insured (Correct answer)
Vehicle registration copy
DMV driving record printout

Correct answer: Certificate of liability insurance naming the company as an additional insured

A certificate of insurance with the company named as an additional insured confirms the contractor has coverage and that the company is protected under that policy.

Question 21: Under the Americans with Disabilities Act (ADA), what obligation does a fleet manager have when a driver requests an accommodation due to a medical condition?

No obligation if the driver cannot meet all essential job functions
Engage in an interactive process to determine whether a reasonable accommodation exists that allows the driver to safely perform essential functions (Correct answer)
Immediately reassign the driver to administrative duties
Require the driver to obtain private disability insurance before returning to duty

Correct answer: Engage in an interactive process to determine whether a reasonable accommodation exists that allows the driver to safely perform essential functions

The ADA requires employers to engage in a good-faith interactive process with the employee to explore reasonable accommodations before making any adverse employment decision.

CAFM Risk Management

Which document formally transfers liability for a fleet vehicle to a third-party vendor performing off-site maintenance?

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