How does Airbnb handle security deposit for hosts?

Security deposit is a rare way how Airbnb secures protection for hosts when damage occurs during a guest’s stay. A more general protection Airbnb provides for all hosts is host damage protection as part of Aircover.

As an Airbnb host, securing your property and belongings is a critical aspect of owning or managing a vacation rental business. Navigating the world of security deposits can be challenging and confusing. Let’s look into how to protect your property best as an Airbnb host while keeping your occupancy rate the same!

What is a security deposit?

As a host, your primary concern is to protect your property and ensure that your rental home is well-maintained for future guests. A security deposit can be a safety net, providing a financial safeguard in case guests cause any damage to your property during their stay. It is beneficial since you define the amount and can adjust it to your own business needs.

How much should security deposits be?

The amount of the security deposit is determined by the host most of the time and it can be anywhere in a range from €100-2,000. When hosts set an amount as a security deposit should consider:

• the type of property
• location
• possible risks
• not to exceed 20% of the total cost of booking.

On the downside, it is important to keep in mind that in some cases a security deposit can deter guests from booking, that is why it is important to find the perfect amount that works for guests and hosts as well.

Overview of How Airbnb Handles Security Deposit

While most guests are respectful and follow the house rules, there have been cases where guests have caused damage or stolen some items. In these cases, hosts may be left with costly repairs or replacements.

To protect hosts from these risks, Airbnb offers a few options that help hosts to protect their properties. Security deposit at Airbnb is not always an option. Airbnb does not allow hosts to set security deposits and only makes exceptions when the host uses API software to manage their listings. Instead of a security deposit, Airbnb offers damage reimbursement for hosts that can be requested by the host as part of Airbnb’s Host Damage Protection.

Security Deposit for Hosts on Airbnb

Airbnb does not allow hosts to charge guests a security deposit through their website or outside Airbnb. Instead, they inform the guests that they may be charged more in case of causing damage during their stay.

When you as a host set up a listing on Airbnb, you will not have the option to require a security deposit, you can however rely on the host damage protection (part of Aircover for Hosts) that can cover hosts’ damages up to $3 million.

Airbnb Security Deposit in the form of offline fees

When you as a host manage your listings with the help of a software like Your.Rentals, Airbnb makes an exception and allows you to set a security deposit and receive payment in case of damage.

The security deposit in this case falls under offline fees, along with cleaning fees and resort fees, which means you collect the fee outside Airbnb. It is allowed as long as it is communicated and is listed in the price breakdown before booking.

The security deposit is collected directly from guests using a separate payment method outside of Airbnb. It is normally collected before a guest’s stay, at check-in, or within 48 hours of checkout.

Keep in mind, that you might be compensated later then 48 after check-out, for instance with the next payout or within 30 days. It is due to the process of documenting the damage, and claiming the reimbursement.

In case you set a security deposit at Your.Rentals, you should seek the help of our team to get your refund.

Host Damage Protection at Airbnb

Airbnb Host Damage protection provides up to $3 million in protection for hosts that covers damages that happened during a guest’s stay. This acts as a supplementary safety net, covering hosts in circumstances when the host was not allowed to set a security deposit but suffered damage during a guest’s stay.

If you are publishing directly on Airbnb, in order to receive reimbursement for your damages, you need to file a complaint at Airbnb’s Resolution Center.

When you filed a complaint, Airbnb will then decide whether you can receive the money or not.

How to claim reimbursement in case of damage?

In case of damage, you have to follow the following process in order to get financial compensation:

1. Document the damage. Take photos or videos of the damage, estimate the possible repair and cleaning costs, and include the receipts of these costs if you already took care of the repair.
2. Act within 14 days of the guest’s checkout, you need to file a complaint at Airbnb within this time range if you want to get the refund.
3. After you submit your request, the guest has 24 hours to reply. When the guest rejects to pay, you have to involve Airbnb Support and they will ask for evidence. (i.e.: photos, receipts, etc.). You need to show the evidence within 30 days of the damage/loss.

What happens after I have filed a complaint?

1. Airbnb will get back to you within 24 hours.
2. If your request is accepted, Airbnb will send a request for the guests to pay the amount.
3. The guest has 72 hours to reply and accept or decline the request.
   If the guest accepts and pays, you will receive the money and can cover your damages.
4. If the guest declines, Airbnb will take over and transfer you the amount so you can cover the damages.
5. So, after your request is accepted, Airbnb ensures that you will be compensated for the financial damage you suffered.

Challenges and Concerns with Airbnb’s Security Deposits and Host Damage Protection

While Airbnb’s security deposit and Host Damage protection offer hosts a peace of mind, there are some challenges and concerns that hosts should be aware of.

• Security deposits may deter guests from booking your home rental, as they perceive this as an indication of a less welcoming host. Or since the deposit is listed in the fees, they perceive it as an amount that is being charged with or without damage.
• The process of claiming funds from a security deposit or through the Host Damage Protection can be time-consuming and require documentation, which may deter hosts from pursuing smaller claims.
• Relying solely on the Host damage protection can be risky due to its limitations and exclusions, leaving hosts potentially vulnerable to financial losses.

Hence, it is essential for hosts to understand these challenges and address them by setting security deposits with a reasonable amount, maintaining clear communication with guests, when damage occurs document it carefully and file a complaint. Plus, it is important to have insurance in addition to these options offered by Airbnb.

Best Practices for Hosts Using Security Deposits and Host Damage Protection

To make the most of Airbnb’s security deposits and Host damage protection, hosts should adopt an approach that is proactive and follow some practices that work best for them. Find some suggestions below:

1. If it is a possibility for you on Airbnb, set a reasonable security deposit so you can avoid discouraging potential guests.
2. Transparency is key. Communicate explicitly and clearly with the guests about these fees, both before and during their stay.
3. Document any damages that happened during a guest’s stay, by taking photographs, receipts, and repair estimates, to support your claims and facilitate a fair resolution.
4. It is good to keep in mind to have homeowner’s or renter’s insurance that can further protect your property when Airbnb’s Host damage protection or the security deposit does not cover the costs of the damages.

By following these practices, you can minimise the risk of losing potential guests, prevent possible disputes, and ensure trust and transparency.

Conclusion

In essence, security deposit and Airbnb’s Host damage protection offer hosts a secure safety net when welcoming guests in their vacation rentals.
The key is to calculate and decide which option is best-suited to your short-term rental business. You can choose to set a security deposit using a software like Your.Rentals when you prefer to handle damages independently without involving Airbnb.
Or, you can rely on Airbnb’s Host damage protection to compensate for damages happened to your property during a guest’s stay.
These processes may be lengthy, but they ensure your property’s protection.