There are many different ways companies can offer their vehicle reimbursement program. All vehicle reimbursements are calculated by the average fixed and variable costs to drive a vehicle in a year. In a Fixed and Variable Rate (FAVR) Program, we calculate the average cost of ownership using a benchmark vehicle. The benchmark vehicle is a critical concept for both drivers and plan administrators in a vehicle reimbursement program.
What is a benchmark vehicle?
A benchmark vehicle is a vehicle a company chooses to calculate the base costs of their reimbursement program. More specifically, a it determines the calculation for depreciation, insurance, license and registration, fuel, tires, and maintenance costs. For example, a construction company may use a work truck, while a sales company may use a midsize SUV. A company has the ability to choose the “benchmark” cost on what works best for their operations.
When using a data-driven benchmark vehicle program, a geographically sensitive fixed and variable rate is created. This is based on the vehicle’s exact year, make, model, and trim—making it the “benchmark” of your program. When Jim Doherty founded AutoReimbursement.com, he recognized the value of having actual data on real vehicles. Every year, AutoReimbursement.com sources data on over 200+ vehicles and insurance down to 44,000+ zip codes.
Why a benchmark vehicle is a critical concept
Companies can create a program that is visible to drivers as an employee benefit while maintaining an HR defensible program. The benchmark vehicle brings driver clarity to their vehicle reimbursement program. Moreover, using a benchmark vehicle also creates an “easy-to-explain” program for drivers and plan administrators.
At AutoReimbursement.com, we discovered that driver experience and retention significantly improve when drivers have access to their reimbursement calculation. We have also consistently found plan administrators appreciate having the ability to see calculations for driver reimbursements. This brings higher satisfaction to the FAVR program. Therefore, when a driver questions their reimbursement, plan administrators can explain their reimbursement calculation in detail.
AutoReimbursement.com’s extensive vehicle database has made our program the standard in vehicle cost data for FAVR Programs.
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