The migration failed correctly but the error was not handled correctly in the engine. The error message in CNV was "cannot migrate VMI which does not use masquerade to connect to the pod network".
With masquerade configured migration works fine. We need to make sure that the user sees why the migration failed.

2020-07-09 19:53:22,973+02 WARN  [org.ovirt.engine.core.dal.dbbroker.auditloghandling.AuditLogDirector] (default task-7) [e1eea64f-cfef-4935-a64f-74ca9ce35f6a] EVENT_ID: VM_MIGRATION_NO_VDS_TO_MIGRATE_TO(166), No available host was found to migrate VM cirros-vm-notfromtemplate to.
2020-07-09 19:53:22,978+02 ERROR [org.ovirt.engine.core.dal.dbbroker.auditloghandling.AuditLogDirector] (default task-7) [e1eea64f-cfef-4935-a64f-74ca9ce35f6a] EVENT_ID: VM_MIGRATION_FAILED(65), Migration failed  (VM: cirros-vm-notfromtemplate, Source: talayan-pytest-8gw99-worker-wqnwd).
2020-07-09 19:53:22,984+02 INFO  [org.ovirt.engine.core.bll.MigrateVmCommand] (default task-7) [e1eea64f-cfef-4935-a64f-74ca9ce35f6a] Lock freed to object 'EngineLock:{exclusiveLocks='[08e73976-e63f-46f1-baae-0f84e9bae728=VM]', sharedLocks=''}'
2020-07-09 19:53:23,002+02 ERROR [org.ovirt.engine.api.restapi.resource.AbstractBackendResource] (default task-7) [] Operation Failed: [Fatal error during migration]
2020-07-09 19:53:44,290+02 INFO  [org.ovirt.engine.core.bll.MigrateVmToServerCommand] (default task-7) [6b49e45e-2581-4aea-93c8-57e76a68d93f] Lock Acquired to object 'EngineLock:{exclusiveLocks='[08e73976-e63f-46f1-baae-0f84e9bae728=VM]', sharedLocks=''}'
2020-07-09 19:53:44,391+02 INFO  [org.ovirt.engine.core.bll.MigrateVmToServerCommand] (default task-7) [6b49e45e-2581-4aea-93c8-57e76a68d93f] Running command: MigrateVmToServerCommand internal: false. Entities affected :  ID: 08e73976-e63f-46f1-baae-0f84e9bae728 Type: VMAction group MIGRATE_VM with role type USER
2020-07-09 19:53:45,053+02 ERROR [org.ovirt.engine.core.bll.MigrateVmToServerCommand] (default task-7) [6b49e45e-2581-4aea-93c8-57e76a68d93f] Command 'org.ovirt.engine.core.bll.MigrateVmToServerCommand' failed: EngineException: Internal error occurred: admission webhook "migration-create-validator.kubevirt.io" denied the request: Cannot migrate VMI, Reason: DisksNotLiveMigratable, Message: cannot migrate VMI with non-shared PVCs (Failed with error migrateErr and code 12)
2020-07-09 19:53:45,091+02 ERROR [org.ovirt.engine.core.dal.dbbroker.auditloghandling.AuditLogDirector] (default task-7) [6b49e45e-2581-4aea-93c8-57e76a68d93f] EVENT_ID: VM_MIGRATION_TO_SERVER_FAILED(120), Migration failed  (VM: cirros-vm-notfromtemplate, Source: talayan-pytest-8gw99-worker-wqnwd, Destination: talayan-pytest-8gw99-worker-rgnr5).
2020-07-09 19:53:45,099+02 INFO  [org.ovirt.engine.core.bll.MigrateVmToServerCommand] (default task-7) [6b49e45e-2581-4aea-93c8-57e76a68d93f] Lock freed to object 'EngineLock:{exclusiveLocks='[08e73976-e63f-46f1-baae-0f84e9bae728=VM]', sharedLocks=''}'
2020-07-09 19:53:45,101+02 ERROR [org.ovirt.engine.api.restapi.resource.AbstractBackendResource] (default task-7) [] Operation Failed: [Fatal error during migration]


VM has evictionStrategy: LiveMigrate

if I have to have some more setting to be able to live migrate please specify

(In reply to Pavol Brilla from comment #4)
> if I have to have some more setting to be able to live migrate please specify

There's an example for how to create a migratable VM in Kubevirt:
https://github.com/kubevirt/kubevirt/blob/master/examples/vmi-migratable.yaml
Note that this is a VMI and in order to have it shown in oVirt, we need to create a VM.

A virtual machine that should be able to migrate:

---
apiVersion: kubevirt.io/v1alpha3
kind: VirtualMachine
metadata:
  labels:
    special: vm-migratable
  name: vm-migratable
spec:
  running: false
  template:
    metadata:
      labels:
        kubevirt.io/vm: vm-migratable
    spec:
      domain:
        devices:
          disks:
          - disk:
              bus: virtio
            name: containerdisk
          interfaces:
          - masquerade: {}
            name: default
        machine:
          type: ""
        resources:
          requests:
            memory: 64M
      networks:
      - name: default
        pod: {}
      terminationGracePeriodSeconds: 0
      volumes:
      - containerDisk:
          image: registry:5000/kubevirt/alpine-container-disk-demo:devel
        name: containerdisk

Error of migration failure is visible in engine.log:

2020-08-26 19:31:04,565+02 ERROR [org.ovirt.engine.core.bll.MigrateVmCommand] (default task-56) [6cb613fc-b87e-475b-9d4e-9e4786200c93] Command 'org.ovirt.engine.core.bll.MigrateVmCommand' failed: EngineException: Internal error occurred: admission webhook "migration-create-validator.kubevirt.io" denied the request: Cannot migrate VMI, Reason: InterfaceNotLiveMigratable, Message: cannot migrate VMI which does not use masquerade to connect to the pod network (Failed with error migrateErr and code 12)

Point of this bug - better error message for failing migration of ocp virtualization vm is verified

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory (Moderate: Red Hat Virtualization security, bug fix, and enhancement update), and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://access.redhat.com/errata/RHSA-2020:3807