Everything you need to Know about Airbnb Damage Deposits

Property owners, especially those who are new to the vacation rental business tend to trust their guests and forgo the process of charging damage deposits prior to checking in. However, it must be known that being in the short-term rental business is not a no-risk job.

Even if your guest is trying to be careful, accidents do happen and things can be broken or damaged and sometimes, guests won’t be completely honest about it especially if they think they could be charged for it. Adding a damage deposit to your listing is a safety measure that will ensure that damages and lost items can be taken care of at almost no cost to the host. It is also a good way to ensure that guests are mindful of how they handle themselves around your property.

In this article, we talk about everything you need to know about Airbnb damage deposits from what it means and how you can implement it to the dos and don’ts regarding rental damage deposits.

How Does Airbnb Handle Security Deposits?

Security deposits can be required by either the host or by Airbnb. When Airbnb handles security deposits it is calculated based on a home’s features and/or the timing of a reservation and is never requested based on anyone’s race, national origin, ethnicity, sex, gender identity, or age.

Note: Security deposits must be handled through Airbnb. Handling them in cash or through a third-party payment method is a direct violation of Airbnb’s Terms of Service.

What Is An Airbnb-Required Damage Deposit?

An authorization hold for the security deposit amount will be placed on hold for the security amount on the guest's payment method two days before the check-in date. This means that the guests won’t be charged but they won't be able to access these amounts either until the hold is released, this usually happens 14 days after the check-out date or before the next guest checks in.

How Does Airbnb Calculate Security Deposits?

The damage deposit calculated is actually 60% of your rental's nightly rate with a cap of $1000 USD, this amount is usually adjusted for longer stays. If you have already added an amount as a safety deposit Airbnb will use the amount set by you.

How Will Your Airbnb Damage Deposit Be Applied?

Airbnb damage deposits are not charged when a booking is made. However, details of the deposit including the amount, when it will be held, and how soon it will be released should be made available to guests on your Airbnb’s description page. The actual authorization hold will happen two days before the guest checks in. Bear in mind, however, that guests must be shown the amount of an Airbnb-required security deposit when they check in.

In Case An Accident/Damage Occurred, How Can The Damage Deposit Be Accessed By Hosts?

The claim process is not automatic. Hosts need to submit a claim via the Airbnb resolution center within 14 days of the check-out date or before the next guest checks in, whichever happens first.

What Happens If Airbnb Is Unable To Authorize The Hold For A Guest’s Security Deposit?

If for whatever reason Airbnb is unable to authorize the hold for the security deposit amount, guests will be notified via email so that they can arrange for the funds if there is a shortage in their account or try another method of payment. If that doesn’t work out the reservation will be canceled and any money paid for the reservation will be refunded in full.

What are Host-required security deposits?

This is when you, the host, set the damage deposit amount instead of Airbnb. This amount can range from anywhere between $100 USD to $5000 USD and must be communicated to guests before they make the reservation.

How Does A Host-required Damage Deposit Differ From An Airbnb-required Damage Deposit?

In host-required damage deposits, no authorization hold will be placed. Guests only get charged when you make a request to collect their security deposit depending on the damage done.

All collections on security deposits are handled according to Airbnb’s Host Guarantee Terms and Conditions. Additionally, in accordance with Airbnb’s Host Guarantee Program, you may have access to property damage protection of up to $1,000,000 USD for your home. Under this program, you will be required to produce documentation of damaged or missing items to request reimbursements from guests, within 14 days of check-out or before the next guest checks in (whichever is earlier).

What Kind Of Documentation Is Required To Make Damage Claims?

You will need to provide documentation of damages done to your property such as photos, videos, invoices, and receipts for repair or written estimates to process your claim. If the damage was done outside your living space CCTV footage of the damage being done could go a long way in proving your case. Airbnb will look into all documentation from your side as well as the guest’s side before deciding if you require the deposit.

What Are The Problems Affiliated With Charging Security Deposits?

1. Surprise charges may worry guests:

Charging a security deposit may discourage guests from booking your holiday rental especially if there is another one in your neighborhood that doesn’t charge a security deposit. A misconception that most people have about damage deposits is that it has to be paid upfront. Most hosts find that they have to convince guests that the security deposit amount is refundable if no damage occurred during their stay.

2. Added confusion to the booking process:

You will definitely have more questions to answer about your damage deposit especially from first-time guests. While it will definitely take up a lot of your time it will also make the booking process seem more complicated than it actually is.

3. It may create trust issues:

While charging a damage deposit can convince some guests to treat your property with more respect and be mindful of their actions during the stay, others may feel less trusted. They feel less trusting of the host and consider a host who charges an Airbnb security deposit is picky and looking for a way to claim it as an extra source of revenue.

In Conclusion:

Collecting damage deposits is one of the most effective methods of ensuring your Airbnb remains in the best condition. It will give you peace of mind, knowing that potentially occurring damages can be resolved again quickly. Chances are that it may put off guests looking for shorter stays, however, it will definitely stop troublesome guests with questionable intentions from visiting your property.

Taking time to talk to guests and explain that their money will be refunded in full provided that they don’t cause any damage to your property and adhere to the guidelines highlighted in the agreement you shouldn't have any issues setting up a damage deposit for your property.

Are you looking for ways to grow your vacation rental portfolio? Talk to our sales team or request a free demo to find out how we at Hostaway help property rental managers all over the world expand their portfolios and increase profits.