Renting out your property on Airbnb is not completely risk-free. So, it’s comforting to know Airbnb allows hosts to protect their vacation rental properties by charging an Airbnb security deposit.
Don’t worry if you are unfamiliar with the concept of an Airbnb security deposit, we can fill you in on the details. The first thing we need to point out is that an Airbnb security deposit isn’t the same thing as Airbnb Host Guarantee or property insurance.
Read on if you would like to learn more about Airbnb security deposit and how it works for hosts and guests.
What Is an Airbnb Security Deposit?
An Airbnb security deposit is an amount of money collected from a guest for any damages to your property rental. Hosts sometimes confuse Airbnb security deposit with Airbnb Host Guarantee, but the two are separate entities.
The Airbnb Host Guarantee provides protection of up to $1,000,000. It should provide cover in the rare event of major damage occurring to your rental. However, Airbnb does not consider lost keys or broken plates to be major damage, and this is where an Airbnb security deposit comes in handy.
If activated for your Airbnb listing a security deposit can help you avoid paying for minor breakages and unforeseen problems out of your own pocket. This means you won’t be forking out for a brand new set of wine glasses if your guests happen to drop a tray full one evening!
How Does It Work for Hosts and Guests?
Your guests will be pleased to discover that, according to Airbnb security deposit policy, they don’t have to pay a security deposit on booking your property. No additional payment is requested following a reservation. Instead, the system will store the guest’s payment information.
If you find your favorite comfy armchair badly damaged or brand-new wine glasses completely broken you have 14 days (following guest check-out) to make a claim relating to compensation or your losses.
How Do I Claim on My Security Deposit?
Prior to making an Airbnb security deposit claim, you will need to take photos or shoot a brief video recording any damage. You should also record any information that might support your claim – i.e. the value of the damaged items etc.
To file a claim you will need to visit the Airbnb Resolution Center. You will have to send photographs, receipts, invoices and other information confirming the value of your damaged items.
After making a claim prepare to be patient – the security deposit isn’t collected immediately. First off, your guest is given 72 hours to respond to your complaint. If they accept the amount requested, then you will receive compensation in 5 to 7 days.
But what happens if your guest declines the claim or doesn’t respond? In this case, the process of getting your expenses covered gets a little bit more complicated. You will need to involve Airbnb to intervene and help resolve the dispute.
Airbnb will conduct their own investigation, and decide whether or not you are eligible for financial compensation. If Airbnb makes a resolution in your favor you can simply sit back and wait for the money to arrive in your account.
How Much Should I Charge for an Airbnb Security Deposit?
Make sure guests know your house rules – play fair by outlining what is, and what is not acceptable. If everything is clear there can be no argument regarding your security deposit. If your guests break the rules they understand they will be penalized.
Airbnb doesn’t suggest an exact amount in terms of requesting a security deposit. It’s up to you, as the host, to decide on the true value of the belongings of your property. It’s tempting to opt for a high figure to make sure you cover all expenses should there be any damage. However, do keep in mind that asking for a lot could scare away potential guests. Asking for a substantial amount as a security deposit and setting a strict cancellation policy is a surefire way to make travelers feel truly unwelcome.
Generally, an Airbnb security deposit doesn’t exceed 20% of the total cost of the booking. Hosts often set an amount within the range of $100 to $500.
What are the Pros and Cons of Requesting a Deposit?
An Airbnb security deposit helps provide hosts with a sense of security. If any damage does occur you can make a claim, and hopefully recoup any losses. Unsavory guests e.g. those looking for a vacation rental property to throw a rowdy party will be put off booking. They know they could face the possibility of having to cough up for an Airbnb security deposit if things get out of hand.
Are there any downsides to requesting an Airbnb security deposit? Hosts worry that guests might be too worried to book if they believe they are going to make additional payment upfront.
Many guests just simply don’t know how Airbnb security deposit works. There’s an argument that Airbnb doesn’t do enough to educate guests. Therefore an Airbnb security deposit mentioned in a listing could seem like an insurmountable obstacle when making a reservation. Certain guests have also pointed out that being asked to pay a deposit makes them feel a sense of distrust from the host, and this could discourage them from staying at the property.
Should I Charge an Airbnb Security Deposit?
This is a question that bothers many hosts. On one hand, an Airbnb security deposit provides hosts with peace of mind. However, you do run the risk of putting off guests from booking. At the end of the day, it is really up to you to decide.
Many hosts do charge a security deposit, and it doesn’t make their vacation rental business any less successful. While other hosts who manage their vacation rentals without requesting an Airbnb deposit report that they are also doing great.
As a host, you should do all you can to protect your property, whether you decide to opt for an Airbnb security deposit or not! Avoid big money losses by not keeping valuable items in your vacation rental property. Experienced hosts also suggest finding new ways of enhancing guest experience and focusing on profitability. If you increase your income you will find it less challenging to pay for repairs for minor damages and the wear and tear of your property.