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Do You Need to Take a Security Deposit for Your Vacation Rental?
While many guests know that security deposits exist in vacation rental land, it can sometimes be a disincentive when it comes time to make a booking. But hosts also appreciate the peace of mind that comes with that small extra cushion in case of damage. There’s not a clear and simple one-size-fits-all answer to this question.
Why Have a Security Deposit at All?
This is something you can have in place so that guests take a bit more active responsibility for breakage and damage. It’s been demonstrated that guests who make a security deposit tend to be more careful, despite having already put money down against potential damage.
It’s clear that you shouldn’t use the security deposit for regular wear and tear or for minor items like a missing fork or a single broken glass. If you do, you might end up “paying” for that in the reviews.
For our part we’ve seen everything from a guest apologetically leaving $10 to cover two forks lost on a picnic to one hiding a broken mug in a cabinet (where we, of course, found it).
Whatever the case may be, make sure that if you choose to take a security deposit, only apply it to the situations in which the damage is more than minor.
An Alternative to a Security Deposit
Guests have been known to immediately stop a booking and choose a different property when they see “security deposit” show up on the payment page. One alternative might be renter’s insurance. Several companies, like Assurant, offer renter’s insurance for your guests that offers a very high level of coverage for rates sometimes as low as $5/day. This allows both host and guest to feel “covered” while removing a potential “security deposit” stigma.
That said, renter’s insurance doesn’t cover intentional damage or theft, may have a deductible, and may take time to pay out.
What to Do If There is Damage
We also want to point out that it’s important to have a good relationship with your cleaners (cough cough). They are always going to be the first eyes-on when a guest leaves and can tell you right away if anything is amiss or broken. This is crucial because companies like Airbnb have rules when it comes to security deposits: damage must be reported within 14 days or before the next guest checks in.
That means you need to take photos and document if and when there is damage. Be upfront with the incoming guests if the damage cannot be repaired before they check-in. Offer them something to make it right with them (a gift card for a restaurant, a bottle of wine) and give them a timeline for when the repair will be completed, if it will be done so during their stay. Don’t underestimate guests’ willingness to be understanding, especially if you communicate with them as soon as possible and are proactive about making it right.
As for the previous guests who caused the damage, don’t underestimate the power of kind and direct communication. Often people are willing to address a problem, especially on platforms where the way you have acted in previous situations follows you around in your ratings and reviews. However upset you might be, just remember that emotional reactions don’t normally lead to positive resolutions.
What to Choose?
For many hosts, apart from what we’ve noted above, the decision on a security deposit will rely on both their individual personality and their experience. Do they generally have a positive outlook on their guests? Has their experience validated that outlook? Or have they been caught out a couple times with guests and would rather be safe than sorry? How a host answers these questions will determine whether it’s ultimately the best decision to use a security deposit for the listing.
Are you yay or nay on security deposits? Or are you on the rental insurance bandwagon? Reply and let us know!