Learn everything you need to know about vacation rental damage waivers and see tips for protecting your property.
January 11, 2024
Even with the most well-intentioned of guests, accidents can happen. A toddler knocks over a lamp and it breaks, or a tipsy guest spills wine on your white carpet. These aren’t problems you’ve caused, but they’re problems you’ll unfortunately have to deal with (and pay to resolve).
A vacation rental damage waiver can help protect you from these types of damages and prevent them from cutting into your profits. But before you decide to ask your guests for a damage waiver, you need to understand what they encompass and whether you have other, more suitable options available to you.
This article explores:
What a vacation rental damage waiver is
How it differs from a security deposit
Whether you should request a damage waiver
Preventative tips for avoiding damage to your vacation rental
What is a vacation rental damage waiver?
A vacation rental damage waiver is a non-refundable fee you can charge guests to cover the cost of accidental damage incurred during their stay. This covers incidents like:
Scratches and scuffs on floors and walls
Stains and spills on upholstery and carpeting
Broken furniture and decor
The key is that this damage must be accidental for it to be covered by a damage waiver—damage waivers do not apply to intentional damage or damage caused by illegal or reckless behavior.
Additionally, a damage waiver does not cover damage to or theft of a guest’s personal property, nor does it apply to problems caused by a guest breaking your house rules (for example, breaking a no-pet policy or smoking in a non-smoking rental).
Damage waiver vs security deposit
A damage waiver and a security deposit are not the same thing. First off, while a damage waiver is non-refundable, a security deposit is collected from a guest before their stay and returned after they check out, as long as they didn’t cause any damage.
Both damage waivers and security deposits have their pros and cons. On the plus side, damage waivers help you avoid the case of a guest dispute if they cause damage and don’t want to own up to it, since the funds are guaranteed and paid upfront. However, since they are non-refundable, guests may be more hesitant to book your unit than if it didn’t require a damage waiver.
When it comes to security deposits, since they’re refundable, they aren’t usually as much of a deterrent to potential guests. But given that guests expect to get their security deposit back, you may face disputes in the case of a guest causing damage but claiming they didn’t.
Should I include a damage waiver for my vacation rental?
There’s no one-size-fits-all approach to short-term rental damage protection, so whether you should include a damage waiver depends on the type of property you have and the type of guests you host. For example, if you’re a pet-friendly property or host families with small children, charging a damage waiver is a good way to offset the costs of inevitable wear and tear to your unit.
However, if you tend to rent to older couples or solo travelers, charging a damage waiver may not be so crucial, and could actually cost you profits by deterring guests from booking with you. So weigh up the costs and benefits of implementing a damage waiver policy before making a decision.
How much should you charge for a damage waiver?
Should you decide to implement a damage waiver, the next step is deciding how much to charge your guests. A number of factors impact how much you should charge for your damage waiver, so while we can’t give you a concrete number, we can help you decide how to evaluate your property and its risks and charge your guests accordingly.
When setting your damage waiver amount, keep these variables in mind:
Property attributes: If your unit has a pool or hot tub, or if you provide sports equipment and recreational gear, it’s worth charging a higher damage waiver, as you’re responsible for maintaining more than just the property itself.
Property location: Perhaps you’re located at a ski resort and it’s not uncommon for guests to scuff up floors with ski boots. Or if your unit is located in a beach town that’s popular for spring break getaways, charging a higher damage waiver is justified.
Length of stay: Many hosts and property managers choose to charge a per-night rate for their damage waiver amounts. After all, the longer a guest is at your property, the more likely it is they’ll cause accidental damage.
Insurance policy: If you already have short-term rental insurance, you’ll want to take this into account when setting your damage waiver amount, as your policy may already offer robust coverage.
Comparable properties: Take a look at what other properties in your area are charging. While you want your damage waiver to protect your profits, you don’t want it to be so high that it discourages guests from booking with you.
Tips for avoiding damage to your vacation rental property
A damage waiver helps protect you against the expenses related to accidental property damage and gives you greater peace of mind. Charging a damage deposit can also be reassuring to homeowners interested in your services, as it shows you’re committed to protecting their vacation home and keeping it in pristine condition.
However, there’s no better damage coverage than preventing it from happening in the first place. Here are three ways you can be proactive to keep your property safe and in good condition.
Screen potential guests to avoid problematic stays
Guest screening helps you avoid renting to guests who may be more likely to cause damage. The most basic way to implement guest screening is to deactivate Instant Book (if you list on Airbnb) and do a little research into every guest before approving their reservation request
Ensure they have a verified ID, ask a little bit about the purpose of their stay, and check and see if they have reviews from previous stays. If you ask the right questions, you can get a feel for how a guest is going to treat your property—this is especially important if you have guests booking directly with you and you can’t see other hosts’ reviews of them.
Additionally, you can sign up for a designated guest screening tool to do this work for you. Screening tools will also dive deeper into guests’ backgrounds to ensure they’re not a risk and don’t appear on local court records, criminal databases, or watchlists.
Establish clear house rules to prevent damage
You can’t expect your guests to follow any guidelines if you don’t clearly convey them, so be up-front and transparent about your vacation rental house rules. Include your house rules in your listing, and send them out to guests as soon as they make their reservation.
If you have a flexible cancellation policy, you can even give your guests a day or two to look through your guidelines to decide whether your unit is the right fit for them. While it may seem counterintuitive to give guests who already booked a chance to cancel, you may be saving yourself from headaches, repairs, and expenses in the long run.
Perhaps the guest is a smoker and prefers a rental that permits smoking. Or maybe they weren’t aware of your pet policy but need to bring their dogs with them on their trip. You need to be clear about your house rules to prevent unintentional damage and protect your properties.
Use smart home technology to monitor your properties
Guests sometimes break house rules, and it can be hard to catch issues as soon as they occur, especially if you manage your units remotely.
That’s where smart home technology for short-term rentals comes into play. The Minut sensor, for example, monitors occupancy levels and ensures guests stay below a preestablished noise threshold, helping you prevent large gatherings and unruly parties. And the device’s cigarette smoke detection feature notifies you of smoking events as soon as they occur so you can send a friendly reminder to your guests to head outside if they’re going to light up.
Plus, even mentioning in your listing and house rules that you use a device like Minut is enough to deter the wrong type of guest from booking with you, helping ensure you’re booking the right type of guests and minimizing the risk of preventable damage.
Protect your property (and your profits)
Accidents and unintentional damage are a part of the risks you take on when renting out a vacation home. A vacation rental damage waiver can help you mitigate the related costs and protect your profits.
However, damage waivers are not a complete solution to keeping your property and its contents safe. That’s why you should use a device like the Minut sensor to get an overview of what’s happening at your units, no matter where you are. It comes with property protection features like:
Noise and occupancy monitoring
Cigarette smoke detection
Security alarm and siren
Alarm and window break detection
The device also sends you automated alerts when an issue arises so you can address it before it escalates. With the Minut device, you can rest assured that you’re doing everything you can to keep your units safe and prevent damage, keeping your homeowners happy and minimizing repair costs.
Frequently asked questions about vacation rental damage waiver
What does a damage waiver include?
A damage waiver typically encompasses accidental damage incurred during a guest’s stay. This can include things like scratches on floors and walls, stains or spills, and broken or damaged furniture. However, this does not include damage caused by reckless behavior or intentional damage.
Is a damage waiver refundable?
Unlike a security deposit, a damage waiver is non-refundable. While this offers hosts and property managers protection against guest disputes, it can also discourage guests from booking properties that require a damage waiver.