Vacation rental security deposit: deposits, waivers and insurance

A vacation rental security deposit is an amount a guest puts up against damage during a stay, refunded if nothing is broken. On a booking you take yourself, it is one of four ways to cover guest damage. The others are a card hold, a damage waiver fee and damage insurance.

This guide explains how each one works, what the companies behind them publish about cost and cover, and how to choose. Figures were read at each company’s own pages on November 11, 2026. It is general information, not legal or insurance advice.

Vacation rental security deposit options at a glance

Option	Who pays	What it covers	What to watch
Refundable deposit	The guest, refunded after checkout	Damage up to the deposit amount	A higher amount due at booking, refund timing and local deposit rules
Card hold	Nobody, unless you claim against the hold	Damage up to the hold amount	Holds expire and can be declined
Damage waiver fee	The guest, non-refundable	Guest damage up to a limit, paid by you or a waiver company	Exclusions and the reporting deadline
Damage insurance	You or the guest, per booking or per night	Guest damage, and on some policies the structure and liability	Who is insured, the limits and where it is sold

Many hosts combine two of these. A small hold plus a waiver or a policy is the setup OwnerRez recommends in its support pages.

Refundable deposits and card holds

Vacation rental damage deposits come in two forms.

A refundable deposit is real money. The guest pays it with the booking, and you send it back after checkout if nothing is wrong.

A card hold is an authorization. The guest’s card is checked for the amount, and nothing is charged unless you claim.

OwnerRez supports both. Its support pages describe security deposit holds, which it places, renews and releases on a schedule, and refundable damage deposits, where the funds are collected and returned. If a hold fails, the guest is asked for a new card.

The strength of a deposit is behavior. A guest with $500 of their own money at stake reads the house rules. The weakness is the limit, because a deposit covers a broken lamp and not a flooded floor.

Deposits also add friction. A refundable deposit raises what the guest pays up front, and a hold can be declined on a card that is close to its limit. A deduction the guest disagrees with can end in a dispute, so document the damage before you deduct.

Some states and cities set rules for deposits, such as where the money is held and how fast it goes back. Ask an attorney how yours treats a short term rental security deposit.

What a damage waiver fee is

What is a damage waiver fee? It is a small, non-refundable charge the guest pays in place of a deposit. In return, the guest is not billed for covered damage up to a limit.

There are two ways to run one. You can fund it yourself, keeping the fees and paying for repairs from them. Or you can buy a vacation rental damage waiver from a company that pays the claims.

Waivo is one such company. Its FAQ says the program covers accidental and intentional guest damage to the building and contents, pet damage, and theft when a police report is filed. There is no deductible.

Standard limits run from $500 to $5,000. Waivo does not publish prices.

A waiver is not insurance. Waivo’s sample waiver terms say so, and its FAQ says the program does not include liability cover. Treat a waiver as a replacement for the deposit, not for your property policy.

Vrbo sells something similar on its own bookings. A host can require guests to buy Property Damage Protection at $59, $89 or $119 for $1,500, $3,000 or $5,000 of cover.

Vacation rental damage insurance, per booking or per night

Vacation rental damage insurance is cover bought for each stay that pays for guest-caused damage. You will also see it sold as damage protection insurance.

OwnerRez sells one inside its software, powered by RentalGuardian. It is billed to the owner on the monthly invoice, and the owner is the insured party who files any claim. As of November 11, 2026, its support page lists these levels.

Level	Cover	Standard fee per booking
Bronze	$500	$13
Silver	$1,500	$27
Gold	$3,000	$45
Platinum	$5,000	$69

The fee covers a stay of up to 30 days. An Enhanced version costs $10 more at each level and adds host liability and bed bug cover.

The page says the cover is for accidental damage. It lists intentional damage, guest theft and rule violations such as an unauthorized pet as not covered. Once switched on, it applies to every property and every new booking, with an opt-out for some listing channels.

Safely works differently. It sells insurance through an affiliated agency, priced per night, and its homepage says the policy covers guest-caused damage including intentional acts and pet damage. Claims must be filed within 60 days of checkout.

Safely publishes prices on its pages for some booking systems. For Lodgify users, $1,500 of contents and dwelling cover costs $8.25 a night and $5,000 costs $11.29, with no deductible. Your own quote can differ by state, property and booking system.

This kind of short term rental damage insurance is cover for single stays. It does not replace the policy on the building, so ask a licensed agent how the two fit together.

What the platforms do on their own bookings

Vacation rental damage protection on a listing platform follows the platform’s rules, not yours.

Airbnb’s policy says most hosts cannot charge a deposit or a card hold. Damage goes through its claim process and host damage protection of up to $3 million, which Airbnb states is not insurance. The guide to the Airbnb security deposit covers the deadlines.

Vrbo leaves the choice to the host, who can set a damage deposit or require the protection plans above. Either way you have 14 days after checkout to report damage.

Platform cover stops at the platform. A booking through your own website has none of it, so the choice in this guide is yours to make before the first direct guest arrives.

What your booking software can handle

The deposit, waiver or policy has to be collected somewhere, and that place is your booking software.

OwnerRez handles holds, refundable deposits and its own damage protection, and it connects to outside insurers. Its Safely integration is for accounts with 10 or more properties. Smaller hosts are told to ask Safely for a quote directly.

Hospitable builds protection into its higher direct booking tier. Direct Premium includes guest vetting, chargeback protection and $5 million of damage protection, for a fee of 7% that the host pays alone or splits with the guest. Direct Basic leaves damage to you.

If you are still choosing software, weigh this next to the monthly price. The OwnerRez vs Hospitable comparison covers the rest. The direct booking engine guide explains how checkout connects to your site.

A worked example: one four-night stay

Here is the arithmetic for one direct booking of four nights. These are examples from published prices, not quotes for your property.

Setup	Cost for the stay	Who usually pays	Damage covered
$500 card hold	$0 unless you claim	The guest, only if there is damage	Up to $500
OwnerRez Damage Protection, Silver	$27	The owner, or the guest by surcharge	Accidental damage up to $1,500
Safely at the $1,500 level published for Lodgify	$33.00, which is 4 nights at $8.25	The owner, or the guest by fee	Guest damage up to $1,500
Vrbo Property Damage Protection, on a Vrbo booking	$59	The guest	Up to $1,500

Stay length changes the answer. A flat fee per booking gets cheaper per night as stays get longer, and a per-night price does the opposite. At $8.25 a night, a nine-night stay costs $74.25.

I set two of these products side by side, with the prices one owner was quoted, in Waivo vs Safely.

How to choose

Short term rental damage protection is not one product, so start from your own bookings.

• Look at your stays. Short stays favor per-night pricing, and long stays favor a flat fee.
• Look at your damage history. If most of it is under $500, a hold may be enough.
• Check intentional damage and theft. Some products cover both, and some cover accidents only.
• Check who is insured and who files the claim.
• Check the deadline. Reporting windows on the pages I read run from 3 days to 60 days after checkout.
• Check your own policy. Ask your insurer how it treats short-term stays before you rely on per-stay cover.

Put the terms where guests see them

Whatever you choose, state it before the guest pays. Show the deposit or fee as its own line at checkout, and say what it covers and when money goes back.

Your vacation rental agreement should repeat it. Include the amount, how you document damage, what the guest owes above any limit and the refund timing.

A waiver or a policy does not remove the need for rules. The house rules template is a starting point.

This is where a custom site helps. I build the booking pages so the fee, the agreement and the rules appear in the booking flow your software runs.

Final Thought

A vacation rental security deposit is the simplest tool, and it is rarely enough alone. A hold changes how guests behave, a waiver or a policy pays for what the hold cannot, and your agreement ties them together. Read the limits, the exclusions and the deadline before you pick.

If you want direct bookings that show those terms clearly at checkout, see vacation rental website design.