Has he asked you about milage? You already offered a corporate car which he turned down. If he is important to you business then you probably should pay some for milage.

I would not pay his insurance though. I think irina's post is pretty much on the ball. I would offer milage (20-40 cents/mile) or pay a vehicle allowance. You could do something like 30 cents/mile up to $300/month so you don't shoot yourself in the foot witha 1000 mile road trip