Security Deposits vs. Damage Waivers for Vacation Rentals
A security deposit asks the guest to put up money you may or may not refund. A damage waiver is a flat fee per stay that makes you the covered party, with no deductible and nothing to hold or return.
What a security deposit actually asks of everyone
A security deposit works by asking the guest to put up money before they ever walk through the door. You hold that money for the length of the stay, then after checkout you inspect the unit, decide what changed, and choose how much to refund and how much to keep.
That decision sits entirely on you, and it turns every withheld dollar into a conversation with a guest who wants their money back. Even when the damage is obvious, you're the one making the case and gathering the evidence to support what you decide to keep.
A deposit only ever protects you up to whatever amount you set. An honest accident that costs more than the deposit leaves you covering the difference yourself, deposit or no deposit.
What a damage waiver does instead
A damage waiver replaces that whole cycle with a flat fee you buy for the stay: $59 for $1,500 of coverage or $79 for $3,000 at retail, $49 or $69 once you're registered as a partner. Instead of holding a guest's money, you become the covered party.
If a guest accidentally damages the rental unit or its contents during the stay, you file a claim and get reimbursed 100% up to the plan's limit — $1,500 or $3,000. There's no deductible: the full amount of the claim is paid up to the limit you selected.
Nothing changes hands before the stay starts, and nothing has to change hands after it ends. There's no deposit to collect from the guest, no funds to hold, and no refund to calculate and send back.
Who pays, and why guests prefer it
You're the one who purchases the plan and the one who's reimbursed if something goes wrong, but that doesn't mean you absorb the cost. Most lodging providers pass the price of the plan along to the guest, either folded into the rental rate or added as a separate fee at booking.
From the guest's side, that's an easier deal than a deposit. They aren't asked to set aside money they might not see again, and they aren't waiting on your judgment call about what counts as damage. From your side, you get reimbursed without having to chase the guest for money afterward — you never had to secure funds from them in the first place.
See how the purchase and reimbursement flow works end to end on the How It Works page → .
What the waiver doesn't do
A damage waiver only covers accidents — damage that happens by accident to the rental unit or its contents during a covered stay. It was never built to cover everything that can go wrong with a rental.
Gross negligence or willful destruction of property by renter and members of their party isn't covered. Pet damage isn't covered. Normal wear and tear isn't covered. Damage to rental unit or contents outside of the booking period isn't covered either — the plan only follows the guest stay it was purchased for.
Those are four of the plan's exclusions; see the full list, plus the covered examples, on What Damage Protection Covers → .
Switching from deposits to waivers
Making the switch is mostly a change in when and how you collect money, not a change in your booking process. You buy the plan for each stay at the time of reservation, and once you're participating, every guest stay needs its own plan — coverage is for a single stay of up to 30 days, not a standing policy on the property.
How you fold the cost into the booking depends on where the reservation comes from. On VRBO and HomeAway, you can add the damage waiver as a listed fee — learn how to add the fee → . Airbnb doesn't support additional fees, so hosts there fold the cost into the cleaning fee and update their listing terms to say so — see the Airbnb workaround → .
If you manage more than one property or plan to make damage waivers standard on every reservation, register for member pricing → — it saves $10 on every plan and speeds up the purchase by saving your property details.
Ready to cover the next stay? $1,500 or $3,000 of coverage, one flat price per booking.
PurchaseFrequently asked questions
Does damage protection replace a security deposit?
For accidental damage, yes. The host or property manager buys a flat-price plan for the stay and becomes the covered party; an approved claim is reimbursed 100% up to the plan's limit — $1,500 or $3,000, whichever plan was chosen — with no deductible. There is no guest money to collect, hold, or refund.
Who pays for the damage waiver, the host or the guest?
The lodging provider purchases the plan and is the covered party. Most providers pass the cost along to the guest through the rental rate or a separate fee, so the guest isn't out of pocket for an accident and the host is reimbursed without having to secure funds from the guest.
What if the damage was deliberate?
Damage protection covers accidental damage only. Gross negligence or willful destruction of property by the renter and members of their party is excluded, as are pet damage and normal wear and tear.
Related articles