How to Collect a Damage Deposit for your Vacation Rental and Protect Your Property from Guest Damage
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Can you take a damage deposit on Airbnb and VRBO from your guests? How to protect your vacation rental property from guest damage.
Is your property protected from guest damage?
Can you take a damage deposit on Airbnb?
Did you know that your property is not fully protected by Airbnb or VRBO host guarantees for damage protection and even if you go through the claim process for guest damage, you will not necessarily receive any reimbursement.
Worse yet, sometimes guests will fight any damage claims made to their credit card and do a charge back, leading to more time and hassle and a fight with the credit card company to prove the validity of the claim.
This process can take months and in the end may not even result in any monetary compensation for all the extra street of fighting it.
You may be better off going through your own insurance in cases of significant damage or when damage is purposeful, but always file a claim with your hosting website as well. For significant damages such as those from an unauthorized party or vandalism, we recommend you also file a police report to go with your insurance claim.
As a property host it is your responsibility to make sure you are covered for damage and liability with your own insurance. What happens if a guest damages your vacation rental?
Ensure you have your own insurance that covers your vacation rental SPECIFICALLY for Short Term Rental Use or sharing your personal home with guests. Most homeowner policies do not offer this coverage and you need to get an extra rider or separate insurance policy, such as DUUO, to cover your liability and the potential of damage from your guests.
We had a hard time getting good short term rental coverage in British Columbia, Canada. Ultimately Sutterbrook Insurance in Port Moody was able to offer the best price for our home insurance and the short term rental rider even though our property was not located in the Vancouver area.
You need to shop around to several agencies to find the best price and review exactly what they cover, so be sure to get several quotes, don’t just take the first offer.
actual photo of guest damage to an Airbnb and the home condition upon check out #airbnbdamage
Go to the hosting websites for more info on the Airbnb Host Protection Guarantee and VRBO Damage Protection- they do not offer host damage protection unless the guest provides a security deposit or purchases the accidental damage protection insurance
Important Safety Items for Your Vacation Rental Insurance Coverage and Protection
Click here to see our full list of safety & maintenance items on Kit.co
AIRBNB
How to Collect a Damage Deposit on Airbnb and How to File a Damage Claim and Refund Upon Checkout
STEP 1: On your Airbnb listing, login and follow these steps to set your security deposit.
This step only tells guests there is a security deposit, at no time does it actually collect or hold any funds for a deposit.
Guests will often miss this in the details on the listing so we recommend adding a note about the security deposit in the description and send them a welcome email referencing it.
NEXT STEP: Add it to your House Rules
Make sure to include a note like this in your house rules and any specific damage charges for certain items (such as having to drain and service a hot tub).
By booking, guest agrees to pay a security deposit payment which will be requested prior to check in through Airbnb. The guest acknowledges that access to property will be denied until deposit is paid in full or reservation is forfeited without refund. Payment is collected via Airbnb and is potentially fully refundable if all rules are honored by the guest and all members of their party staying at our premises.. It is your responsibility to make sure ALL guests in the group know and follow the House Rules and do not cause any damage. Any damage, accidental or otherwise, must be reported to the host immediately.
NEXT STEP: Requesting the deposit funds to be paid through Airbnb as an extra payment.
You may need to remind your guest and follow up on the payment BEFORE sending them the check in information.
We recommend requesting it up to 14 days in advance and let the guest know it must be paid 48 hours before check in or no entry. You can request it via Airbnb Resolution Center on the reservation (scroll down to Send & Receive Money).
Make sure they have accepted your request - you will get an email or go to the above link to check the status of all your requests
Be Polite! People are busy prepping for travel and leaving work and may often be last minute with things and not purposely ignoring the request.
NEXT STEP: Check for Damage or Excess Cleaning Requirements
Upon Check out you or your cleaners need to completely clean and turn over the space for the next guests.
Immediately document any concerns with photos and make notes. Minor extra cleaning issues (such as marks on the stove from overboiling things) don’t really count as damage but excessive cleaning, anything that renders your property or furnishings unusable for incoming guests (and the cost associated with cancelling an incoming guest to deal with it), smoking smells that violate house rules, stains to mattresses or furnishings or clearly broken items should all be documented.
Small items like broken dishes, stained towels really are just the cost of doing business and we wouldn’t necessarily charge the guest for small items. Look for high cost, excess cleaning costs, etc that will be valid on a claim with airbnb.
Excess cleaning is the above and beyond. We are not talking a few stray items left in each room or extra dirt on the floor. We are talking about spills that require carpet cleaning/couch cleaning, animal mess, party remnants from food and dishes everywhere, and anything that results in your cleaner charging you extra time/cost or results in your space not being rentable that same day.
Important Note: In most cases you must file the claim with Airbnb resolution centre BEFORE your next guest arrives, so this is very urgent, stress the importance of the photos and notes to your cleaners. Their website says 14 days but we frequently hear hosts are denied claims because the next guest has already checked in.
Final Step: Refund the Guest
After check out, send guest a thank you message letting them know that you will process the refund as soon as any final payments for their stay have cleared through Airbnb.
Return it the same way through the resolution centre as soon as you or your cleaners have checked everything over after check out. We wait 24 hours in case the next guest arrives and points out anything we missed that may be damaged and always wait until the payment from their stay, and the damage deposit initial payment, has arrived in your bank account.
If there were any concerns during their stay or any issues in dealing with damages, be sure to make a short, truthful review about that guest for future hosts. Accidents happen, but if there was purposeful damage or the guest went against your house rules, be sure to mention those things on their review.
NOTE - Airbnb may take up to 10 days to process the refund, so you should let the guest know this when you send your final note as well.
Party aftermath against the house rules and definitely damage and excess cleaning charges to these guests, along with a bad review and hopefully Airbnb banning them
VRBO
How to Collect a Damage Deposit on VRBO and Handling Damage Claims Upon Checkout
STEP 1: On your VRBO listing, login and follow these steps to set your security deposit or require guests to purchase the damage protection upon booking instead of a security deposit.
When a guest books, VRBO immediately holds this amount in addition to their reservation payment (click here for more details).
You can alternatively select that your guests much purchase the accidental damage protection insurance offered by VRBO when they make their booking request.
We recommend adding a note about the security deposit/damage insurance in the description.
If you collect a security deposit, send them a welcome email referencing that it will be returned automatically by VRBO 14 days after check out if there are no damages.
For the damage protection insurance, if they cancel their stay before arrival, they can contact the VRBO insurance provider to see if they qualify for a refund on their premium paid.
NEXT STEP: Check for Damage or Excess Cleaning Requirements
Upon Check out you or your cleaners need to completely clean and turn over the space for the next guests.
Immediately document any concerns with photos and make notes. Minor extra cleaning issues (such as marks on the stove from overboiling things) don’t really count as damage but excessive cleaning, anything that renders your property or furnishings unusable for incoming guests (and the cost associated with cancelling an incoming guest to deal with it), smoking smells that violate house rules, stains to mattresses or furnishings or clearly broken items should all be documented.
At this point you need to contact VRBO to file a claim, the sooner the better but you have up to 14 days after the guest checks out.
Final Step: VRBO Refunds the Guest
After check out, given that all went smoothly, send guest a thank you message letting them know that VRBO will automatically process their refund after 14 days.
If there were any concerns during their stay or any issues in dealing with damages, be sure to make a short, truthful review about that guest for future hosts. Accidents happen, but if there was purposeful damage or the guest went against your house rules, be sure to mention those things on their review.
DIRECT COLLECTING
How to Collect Damage Deposits and Payments for Self-Managed Direct Bookings on your website or other 3rd party listing website
STEP 1: On Your Direct Booking Website, Create a Page With Your House Rules & Damage Deposit Policy
If you don’t have a website you can create one easily through Squarespace with our affiliate link for your free trial. Wait for them to send you a bonus discount before converting your trial to a paid account
STEP 2: Confirm your Damage Deposit and Refund Policy on all direct bookings as part of their confirmation email
When you send them a confirmation email and an invoice/payment request, ensure that the terms of the damage deposit and refund of the deposit, are clearly outlined on their booking confirmation and payment receipt.
The damage deposit should be a separate line item on the payment request so it is clearly outlined what they are paying and how much they can expect to receive for a refund.
Step 3: Decide on Your Preferred Payment Collection Method
When you are self-managing your bookings and business, there will be fees charged for any payment processing, much like the fees that Airbnb or VRBO charges you, only a smaller amount.
Decide on which payment platform looks best for you and create your standard pricing and invoice template in the program to make your payment request. When a guest makes a booking with you, your payment request should break down
Nightly rate x number of nights
Cleaning fee
Local, federal and any other taxes
Pet fees or any other fees
Refundable Security Deposit Amount
Payment platforms you can use that have built in payment options for guests to pay by interac, credit card, apple pay and more.
Some of these programs are more user friendly than others. We use Quickbooks as it integrates all of our invoicing and accounting into one place.
For most of these payment providers you will be charged a processing fee for refunding deposits and collecting payments, and you will be responsible for making sure the security deposit funds are in your account when you need to process refunds. Read the details on each provider website and their fees to compare.
Note that not all of these options accept payments worldwide. If you have frequent international travellers, check the fine print to make sure the option selected will be available to most of your guests. Paypal is one of the more common options for international use.
Canadian Hosts with Canadian Banking & Addresses:
Direct Invoice & request E-transfers
if you set up a Rakuten account first then click on the Quickbooks link, you will get a sign up discount or cash back offer bonus when creating an account
US Hosts
if you set up a Rakuten account first then click on the Quickbooks link, you will get a sign up discount or cash back offer bonus when creating an account
Step 4: Check for Damage or Excess Cleaning Requirements
Upon Check out you or your cleaners need to completely clean and turn over the space for the next guests.
Immediately document any concerns with photos and make notes. Minor extra cleaning issues (such as marks on the stove from overboiling things) don’t really count as damage but excessive cleaning, anything that renders your property or furnishings unusable for incoming guests (and the cost associated with cancelling an incoming guest to deal with it), smoking smells that violate house rules, stains to mattresses or furnishings or clearly broken items should all be documented.
If your cleaners have to spend extra time or costs to deal with something from a guest, those costs should be outlined in a professional email reply to them and let them know it will be coming out of their damage deposit.
Step 5: Process the Refund
After check out, send guest a thank you message letting them know that you will process the refund as soon as any final payments for their stay have cleared through Airbnb.
Return it the same way through the resolution centre as soon as you or your cleaners have checked everything over after check out. We wait 24 hours in case the next guest arrives and points out anything we missed that may be damaged and always wait until the payment from their stay, and the damage deposit initial payment, has arrived in your bank account.
If there were any concerns during their stay or any issues in dealing with damages, be sure to make a short, truthful review about that guest for future hosts. Accidents happen, but if there was purposeful damage or the guest went against your house rules, be sure to mention those things on their review.
Most of your guests will likely be GREAT guests but keep in mind that properties with lower Budget price points, places that offer one night stays, or larger homes that can accommodate a whole party crew, tend to be ones that have more challenging guests than most.
Protect yourself with insurance & damage deposits and we also recommend verifying the guest ID, even if the platform has already “validated” their account, they will not actually provide you with the guest ID or contact info should there be any issues.
I hope this information helps you!
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