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What Is a Damage Waiver Fee?

A damage waiver fee is a prepaid, non-refundable fee included in a rental home’s total price that covers accidental damages to your property during the guests’ stay. This agreement states that guests are not liable for unintentional accidents, allowing them to enjoy their holidays without the constant fear of breaking something.

Damage waiver fees are standard in vacation rental homes. They protect guests from having to pay upfront for minor damages such as broken tableware or furniture, spills, scratches on surfaces like walls or doors, and stains. These accidents must be reported to the vacation rental owner or management in order to be covered.

Many guests prefer paying extra for a damage waiver fee instead of a large security deposit. While the cost is less for them, the coverage for a vacation rental owner is quite significant depending on the damage waiver protection company that you’re using.

Damage Waiver Fee

What Is Not Included in a Damage Waiver Fee?

Damage waiver fees don’t cover the following:

  • Intentional damage (such as damage caused by parties) 
  • Damage caused by the violation of the rental policy (such as violating a ‘no smoking’ policy) 
  • Damage to personal items
  • Theft or lost items
  • Damage that isn’t reported during the stay

Any damage that is not covered by the damage waiver fee is charged directly to the guest. 

The Difference between a Damage Waiver Fee and Security Deposit

The main difference between a damage waiver fee and a security deposit is that a damage waiver fee is non-refundable and only covers unintentional damage while a security deposit is refundable and also covers intentional damage and missing items. 

A damage waiver fee is convenient for guests because it doesn’t require them to put down a large security deposit before their stay. Instead, this fee charges around $50 to $100 per reservation, depending on the length of stay and the type of accommodation. Damage waiver fees are preferred in larger vacation rental businesses as they require less time and reduce the conflict that can arise from damaged items. However, they don’t cover everything and the process for filing a claim can be complicated.

A security deposit ensures that guests pay a certain amount upon arrival (or during the booking process) and this money is held until the property is reviewed at check-out. While the amount of a security deposit may vary, it tends to be around $250 to $500 or 10% of the weekly rate. 

Security deposits are typically preferred for smaller vacation rental businesses because they give owners more control, require no waiting time, and ensure that guests treat the property with the utmost respect. However, there is a certain inconvenience that guests face when paying a large amount of money upfront. This uneasiness can lead them to book with competitors who don’t require a security deposit. 

When deciding between a damage waiver fee and a security deposit for your vacation rental, weigh out the pros and cons for your business in order to protect your property while still attracting guests. 

What Is the Standard Damage Waiver Fee on Equipment?

Suppose your vacation rental home includes equipment rentals such as vehicle use, recreational vehicles, or sports equipment. In that case, a damage waiver fee can protect both you and your guests from costly repairs. 

The standard damage waiver fee on such equipment is 10 to 15% of the regular rental rate to cover the cost of potential repairs. 

Should You Include a Damage Waiver Fee in Your Vacation Rental Agreement?

It is vital to include some sort of damage agreement when renting out your vacation rental home. It will eliminate any chance that you will be stuck with an extensive repair or cleaning bill at the end of your guests’ stay. Of course, accidents do happen, so including a damage waiver fee will protect your guest from paying more for their visit than they had budgeted.

It also gives you the liberty to repair and replace items in your vacation home as needed. It eliminates disagreements with guests about whether or not they should be held responsible for certain damages.

Understanding what a damage waiver fee vacation rental agreement is can help you decide how to protect yourself and your guests financially. Whether you choose to include a damage waiver fee or a security deposit, you will have the peace of mind that your vacation home is protected.