Airbnb Security Deposits: What Every Host Should Know

Key Takeaways

• Airbnb’s AirCover automatically protects hosts for property damage, theft, and loss of income up to $3 million.
• Security deposits can only be charged through a Property Management System (PMS), not within the Airbnb platform.
• Security deposits can help deter damage, but may also discourage guests from booking depending on your property and guest profile.

You’ve just finished setting up your brand-new Airbnb. Every corner of the space reflects your style—handpicked décor, a cozy vibe, and a rug that took weeks to find. Now, as the moment of opening up your home to strangers approaches, your mind starts racing. 

What if that one-of-a-kind vase on the coffee table gets knocked over? Or worse, what if a guest spills coffee all over that handwoven rug? Suddenly, the excitement of hosting transforms into the very real concern of potential damage.

Enter security deposits, financial safeguards that hosts can use to cover unexpected costs related to damages, excessive cleaning, or rule violations. Only certain hosts are able to set up an Airbnb security deposit, however. The majority of hosts are protected through AirCover, Airbnb’s host protection program.

In this guide, we’ll walk you through everything you need to know about security deposits, from how to set them up to how they work alongside AirCover. 

Does Airbnb Have Security Deposits?

If we’re talking strictly about traditional security deposits (collected before a guest’s stay and returned afterward) that you can set and manage within the Airbnb platform, the answer is no. Before you go and file a complaint with Airbnb for this perceived shortcoming, though, let’s explore what options they DO offer. 

There are two scenarios for security deposits, or their equivalent, when Airbnbing your property:

1. AirCover: Airbnb’s AirCover program automatically provides Host Damage Protection, which covers losses up to $3 million. All Airbnb hosts are automatically protected by AirCover.
2. Offline security deposits are charged to the guest upon booking and refunded if no claim is filed. However, these types of deposits require that the host be connected to Airbnb via vacation rental software like Uplisting. The host’s property management system (PMS) facilitates the collection and return of the deposit, not Airbnb.

How Does Airbnb Protect Hosts Against Damage, Then?

Airbnb’s Host Damage Protection—part of its AirCover program—protects hosts against particularly severe property damage, theft, or vandalism. It covers losses up to $3 million, which can be a lifesaver in cases of extensive property damage.

Take advantage of Host Damage Protection in situations involving:

• Damages guests cause to your property, furnishings, valuables, or belongings
• Damage guests cause to parked cars, boats, or other vehicles 
• Extra cleaning costs required if guests leave behind stains, pet accidents, or smoke odor 
• A loss of income if you need to cancel confirmed bookings due to guest damage 

Host damage protection does not cover:

• Damage caused by natural disasters like floods, earthquakes, or fires. Airbnb encourages hosts to invest in separate homeowner’s or rental property insurance to cover these types of events.
• Normal wear and tear, such as faded paint or worn-out furniture.
• Liability for injuries, which is covered separately by AirCover’s Host Liability Insurance.
• Non-guest related damage, such as a friend of the guest or a neighbor.

Notably, Host Damage Protection and security deposits are complementary. Using both together—assuming you’re connected to Airbnb via a PMS—ensures you have full coverage for anything that might go wrong during a guest’s stay. If your security deposit doesn’t cover the extent of the damage, then the Host Damage Protection terms can potentially cover remaining costs.

How Airbnb’s Security Deposit Equivalent Works

Airbnb Host Damage Protection applies automatically—there’s no need to opt into the program. In the event of property damage, you can file a claim through the AirCover program.

If you want to charge a traditional security deposit—a refundable fee of a few hundred dollars to cover damaged items—you’ll need to connect your listing to property management software (PMS) that offers a security deposit feature.

Every PMS is unique, so security deposits will work differently depending on which software you use. That said, most platforms should allow you to set a custom deposit amount that guests are required to pay upfront upon booking. After check-out, the security deposit will typically be refunded to the guest if no damage is found and no claims are filed. 

How to add a security deposit on Airbnb through property management software

First, you’ll of course need to make sure your listing is connected to your PMS. 

Follow these steps to confirm your listing is connected to your property management software:

1. Click Profile, then click Switch to hosting 
2. Click Listings and select the correct listing 
3. Under Listing editor, click Edit preferences 
4. Click Property management software and check the status of the connection.

Once your connection is verified, the process of actually setting a deposit will vary depending on which software you use.

Most short-term rental software will provide a flow where you can automatically charge and process a security deposit for certain or all rental platforms (for example, only charge a security deposit on Vrbo; or charge one for all platforms where you list). The software will also likely allow you to prevent guests from finalizing their booking until they pay the security deposit. 

Managing Airbnb Security Deposits

If you’ve decided to charge a security deposit on Airbnb via your PMS, you’ll now have to decide how much to charge and understand how to claim a security deposit for Airbnb damages.

How to determine the right security deposit amount

The key to setting the right security deposit is balancing risk and deterrence. Setting the airbnb deposit amount too high could scare off potential guests, but setting it too low might not offer enough protection for your property.

These factors should influence your decision:

• Property type and size: A larger, more luxurious property may want to charge a higher deposit since there’s greater potential for more expensive damages. Take into consideration your location as well—beach houses, for example, can be more prone to sand and water damage caused by guests. 
• Guest behavior: Consider the profile of your typical guests. Families may be less likely to cause damage than younger groups or parties.
• Local competition: If similar properties in your area charge a security deposit, you’re less likely to face resistance from prospective guests by charging one yourself. Keep in mind that since Airbnb doesn’t allow hosts to set security deposits without third-party software, most Airbnbs don’t charge a security deposit. As such, guests might be particularly deterred from booking Airbnbs with a security deposit.
• Duration of stay: Longer stays tend to increase wear and tear, making a higher deposit more justifiable.

Are Airbnb security deposits refundable?

Yes, Airbnb security deposits are refundable. If no damage occurs, the security deposit will be refunded back to the guest through your PMS. 

Your PMS will either pre-authorize guest payment cards—that is, place a hold for the deposit amount on the card—or fully charge the card. Pre-authorized charges are returned automatically, while full charges might require a manual refund later. If you need to use the security deposit, the claims process will look different depending on your PMS and how they collect the deposit. With Uplisting, you can capture the whole or partial deposit amount via Stripe.

How to file a claim with AirCover

In the unfortunate event that a guest causes damage, you’ll need to file a claim through Airbnb’s Resolution Center. This involves completing the Airbnb host damage protection payment requestpayment request form.

Here’s how to file a claim:

1. Report the Incident Promptly: Report any damage within 14 days of the guest’s checkout or before the next guest checks in—whichever comes first.

2. Provide Detailed Documentation: Submit photos, videos, and a description of the damage through the Resolution Center. Include any relevant communication with the guest. Gather invoices or receipts if you had to pay for repairs or replacements.

3. Host-Guest Resolution: Initially, Airbnb gives the guest 24 hours to pay for the damage. If they don’t, Airbnb steps in to evaluate and potentially cover the damages under Host Damage Protection. If a guest contests the charge, both parties will need to provide evidence. Airbnb will make the final determination based on the details submitted and can charge the guest’s card if they’re found at fault. Airbnb’s review of the claim could take a matter of days, weeks, or even months depending on the situation. 

4. Follow up and Stay Engaged: Ensure you respond to Airbnb’s requests for more information to keep the claim moving forward.

Be clear and specific when documenting the damage, as this will help Airbnb assess the situation and decide in your favor. For best results, take photos of your property regularly so you can show the condition of items before guests check in.

Best Practices for Communicating Security Deposits to Guests

When it comes to security deposits, clear, upfront communication is your best friend. Transparency sets the stage for a smooth guest experience—no surprises, no stress. 

Clearly outline your deposit policy in your listing description and what guests can be charged for. Discourage irresponsible use of the property and potential scenarios for damage in your house rules to avoid awkward conversations later on and ensure guests know exactly what to expect from the get-go.

Be transparent about:

• Why you require a security deposit. Guests will appreciate knowing it’s there to cover potential mishaps, not to nickel-and-dime them.
• What types of damages the deposit might be used for, like a broken lamp or stained couch. The clearer you are, the fewer misunderstandings you’ll face.
• How the refund process works, so guests know that if there are no issues, they’ll get their deposit back quickly and painlessly.

Some guests might be a bit wary of security deposits, but a little reassurance goes a long way. Remind them that most guests get their deposit back in full—no drama involved. With Uplisting, you can automatically send messages like this to guests. Keeping things transparent and relaxed will help guests feel at ease and focused on enjoying their stay, not stressing about their deposit.

Pros and Cons of Using Airbnb Security Deposits

Advantages of charging a security deposit

• Encourages guest responsibility: Guests may be more mindful during their stay, helping to reduce the risk of damage, if they know that they’ve put down a deposit.
• Covers small damages: Security deposits help cover the cost of repairs for minor issues like damaged furniture or stained linens, without the hassle of submitting a claim through Airbnb’s Resolution Center. 
• Peace of mind for hosts: A security deposit can help hosts feel more secure, knowing that they have a financial safety net in place for damages.

Disadvantages of security deposits

• Might deter bookings: Some guests, especially budget-conscious travelers, may be hesitant to book a listing with a security deposit.
• Potential disputes: If a guest disputes a claim or feels their deposit is unfairly withheld, it can lead to negative reviews or even formal disputes on the Airbnb platform.
• Extra admin work: Managing security deposits can take extra time, adding another task to a host’s plate. Certain property management systems like Uplisting can automate the collection of security deposits, though, keeping it hassle-free.

Should You Use a Security Deposit for Your Airbnb Listing?

Ultimately, the decision is yours, but many hosts find that relying solely on Airbnb’s Host Damage Protection is enough. Since most Airbnb hosts don’t charge a separate security deposit, charging one may set your property apart in a bad way and deter guests from booking.

That said, hosts in higher risk situations—like those who own luxury properties or cater to large groups—may prefer the peace of mind that comes with charging a separate security deposit.

When deciding whether to charge a security deposit, consider your:

• Property style: Do you operate a luxury Airbnb with lots of expensive, breakable items? Are most of your furnishings durable and/or affordable? Do you offer any special equipment or amenities to guests, such as bicycles or a hot tub?
• Location: Are there any local regulations that might impact the process of charging and, if needed, claiming a security deposit? Does your location, urban, lakefront, etc, carry any additional risks? 
• Typical guests: Do you cater to young groups who might be more likely to throw parties, or to professionals and business travelers who are less likely to cause damage?