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What are the pros and cons of accepting a security deposit for my vacation rental?


I currently charge for damage insurance, but am thinking about switching.

Asked By: Mike

Tags: Insurance Payments Rates

1 Answers

Mike

The major difference is that a security deposit gives you more control, which might scare your clients a little more than damage insurance would. That's the only substantial negative. 
 
Vacation homeowners will usually ask for around half of the rent--let's say $500, held either by credit card or check--which is a large sum of money that offers renters nothing in return. Whether the deposit is returned relies on both parties agreeing on any possible damages, which can lead to altercations and disagreements. In contrast, insurance lays all the terms out beforehand, although insurance is burdened by some major pros and cons, as well. 
 
But the pros of a security deposit, according to many traditionalist homeowners, make it worthwhile. They give homeowners the power to choose how much of the deposit to return, which ensures that they won't be left with more problems not covered by insurance. Some owners also noted that a security deposit helps motivate renters to leave homes cleaner than they would otherwise.