Insurance Requirement

An insurance requirement is the minimum level of vehicle insurance coverage employees must maintain to be eligible for reimbursement.

These requirements are commonly part of programs like Fixed and Variable Rate (FAVR), Cents-Per-Mile (CPM), and accountable allowance structures. They help ensure that employees using personal vehicles for work are properly covered, reducing risk for both the driver and the organization.

To stay compliant, drivers are typically expected to:

• Provide proof of insurance at regular intervals
• Maintain coverage at or above the required level
• Update documentation when policies renew or change

If a driver does not meet these requirements, they are generally considered out of compliance. In most cases, reimbursement is paused until valid coverage is confirmed.

Insurance requirements also play a role in maintaining tax compliance. In FAVR programs, reimbursements are based in part on expected insurance costs, so drivers must carry coverage that aligns with those assumptions to keep payments accurate and eligible for tax-free treatment.

Clear, well-managed insurance requirements help organizations reduce liability, maintain compliance, and ensure employees are protected while driving for work.