Security deposit vs damage waiver for vacation rentals
A security deposit is money the guest pays or has held on their card and gets back after checkout, minus any damage. A damage waiver is a smaller, non-refundable fee that covers accidental damage up to a set limit. Deposits protect you from more kinds of loss; waivers are easier on guests and on your team.
By Brent Kleinheksel, Founder and CEO. Updated October 19, 2026.
How do a security deposit and a damage waiver compare?
| Compared on | Security deposit | Damage waiver |
|---|---|---|
| What the guest pays | A larger amount, charged or held on their card | A smaller fee added to the booking |
| Refunded after the stay? | Yes, minus any damage you document | No |
| What it covers | Damage, and often other losses your rental agreement names | Accidental damage, up to the limit in the plan's terms |
| Work after checkout | Inspect, then refund, release, or keep part of the deposit | Nothing unless there is damage, then file a claim |
| How guests tend to see it | A large upfront amount they want back | A small fee that ends the worry |
How does a security deposit work?
You collect it in one of two ways. A refundable charge takes the money with the rest of the payment, and you refund it after checkout once the property checks out clean. A card authorization hold reserves the amount on the guest's card without charging it, usually close to arrival, so the guest's money never moves unless you need it.
A deposit gives you money in hand, or on hold, for any damage the guest causes, including damage a waiver would exclude. The tradeoff is work and friction. Someone has to inspect the property, decide on deductions, explain them to the guest, and return the rest on time. A large deposit can also put guests off when they compare your total against similar listings.
How does a damage waiver work?
A damage waiver, often sold as damage protection, is a fee the guest pays with the booking. If the guest accidentally damages something, you file a claim under the plan instead of charging the guest. The guest never waits for money back, and you never have to argue over a deduction.
The limits matter. Plans typically cover accidental damage up to a stated amount and exclude intentional damage, so read the terms before you rely on one. Some managers charge their own damage waiver fee and set money aside for repairs; that is a business decision, so check the rules where your properties are before you start.
What do Airbnb and Vrbo allow?
Airbnb says most hosts are not allowed to charge security deposits, and that where a deposit is permitted it must be disclosed in the right fee field. Instead, hosts can request reimbursement for damage through Airbnb's Resolution Center, and Airbnb offers AirCover for Hosts. Select hosts who connect through software may collect a deposit off the Airbnb platform (Airbnb Help Center, Security deposits, checked October 19, 2026).
Vrbo supports a refundable damage deposit. After a guest checks out, you have 14 days to assess the property and file a damage claim, and the claim cannot exceed your damage deposit amount (Vrbo Help, File a damage deposit claim, checked October 19, 2026).
On your own website, you set the rules. That makes your direct bookings the easiest place to offer guests a choice between the two.
Which should you choose?
Choose a security deposit when the risk is high or hard to insure: large groups, events, luxury furnishings, or long stays. Choose a damage waiver when you want a smoother booking and checkout, especially for families and repeat guests on shorter stays. Many managers use both across a portfolio, a waiver as the standard and a deposit for the properties or stays that need it.
How does Lodgix handle deposits and damage protection?
Collect a security deposit as a refundable charge with the rest of the payment, or as a card authorization hold placed automatically on the arrival date. You choose what guests see the charge called: Security Deposit, Damage Deposit, or Refundable Damage Deposit.
Offer guests a damage protection plan as a fee at checkout, and open a claim against an issued plan from inside Lodgix. You can also add your own damage protection fee to a property, as a mandatory or optional fee, if you offer your own program. Guests paying by card can add travel insurance from Vertical Insure at checkout.
Questions we hear most
Can I charge both a security deposit and a damage waiver?
You can, but most guests see it as paying twice for the same risk. A common approach is to offer the damage waiver as the default and keep a deposit for higher risk stays, such as large groups or long stays.
Is a damage waiver the same as travel insurance?
No. A damage waiver covers accidental damage to your property during the stay. Travel insurance protects the guest's trip, for example if they have to cancel. Guests paying by card can add travel insurance from Vertical Insure at checkout.
Can I take a security deposit on Airbnb bookings?
Usually not. Airbnb says most hosts are not allowed to charge security deposits, and asks for damage to be reimbursed through its Resolution Center instead. Select software-connected hosts may collect a disclosed deposit off platform.
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