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What are the pros and cons of charging for damage insurance?


I currently take a security deposit, but am thinking about just charging for insurance instead.

Asked By: Mike

Tags: Insurance Payments Rates Security

1 Answers

Mike

Damage insurance is a more alluring option for renters -- according to a recent HomeAway survey, "75% of renters prefer a small, non-refundable cost over a larger refundable damage deposit." The greatest "pro" for insurance is the fact that it has the ability to possibly bring in more clients. It's also easier to deal with, and avoids the potential hassle of disagreements and confusion. 
 
That said, it puts the vacation rental homeowner at a strategic disadvantage. Because insurance is cheaper, it is less likely to motivate renters to keep the homes clean. The risk is much smaller for them, and there are many online testimonials that complain that they're switching back to security deposits after several nasty incidents with stains and leftover beer bottles that the insurance policy didn't stipulate.
 
You can read a detailed blog post outlining the differences between security deposits and damage insurance here.