As a Property Host, it is important to protect your short term rental unit from accidental damages caused by guests. One way to do this is by incorporating a damage waiver fee into your rental agreement. A damage waiver fee is a prepaid, non-refundable fee that covers accidental damages to your property during the guests' stay. This eliminates the fear of guests having to pay for unintentional accidents, such as broken tableware or furniture, spills, scratches, or stains.
Damage waiver fees are a common practice in the short term rental industry, providing guests with an alternative to a large security deposit. This fee usually ranges from $50 to $100 per reservation and is preferred by guests who would rather not put down a large deposit before their stay. Additionally, larger short term rental businesses benefit from damage waiver fees as they reduce conflicts and require less time compared to security deposits.
On the other hand, a security deposit is a refundable fee that covers both intentional and unintentional damages, as well as missing items. This fee is usually around $250 to $500 or 10% of the weekly rate and is preferred by smaller vacation rental businesses as it provides owners with more control and requires no waiting time. However, guests may be uneasy about paying a large amount of money upfront and may opt to book with competitors who do not require a security deposit.
When deciding between a damage waiver fee and a security deposit, consider the pros and cons for your business to protect your property and attract guests. Additionally, if your short term rental unit includes equipment rentals, such as vehicles or sports equipment, a damage waiver fee of 10 to 15% of the regular rental rate can protect both you and your guests from costly repairs.
What is not included in a Damage Waiver Fee?
Damage Waiver doesn't cover the following:
❌ Intentional Damage (e.g. damages caused by guest parties)
❌ Damage to personal items
❌ Theft or Lost items
❌ Damage not reported during guests stay
❌ Damage caused by the violation of the rental policies (e.g. violating a 'no smoking' policy).
Including a damage waiver fee or a security deposit in your vacation rental agreement is crucial in protecting your property and avoiding disagreements with guests. It provides you with the liberty to repair and replace items in your vacation home as needed and gives guests the peace of mind that they will not be held responsible for certain damages.
Ultimately, understanding the benefits of a damage waiver fee or security deposit will help you make the right decision for your vacation rental business.