One of the main friction points for travelers when booking a vacation rental is the high costs and logistics associated with security deposits. As compared to the simplicity of making a hotel reservation with no security deposit and 1-day cancellation policy, security deposits are a huge friction point and may result in significant revenue losses for vacation rental businesses.
According to recent survey stats, “security deposit” related complaints are among the most common complaints received from travelers after their vacation rental stay. On one side, travelers complaining about not getting their security deposits back on time, or not getting it back at all. On the other hand, it’s common to see property owners having to withhold deposits due to a wide variety of property damages done by the guests during their stay. Also, many times owners incur in larger repair costs than the money collected from security deposits.
In general, security deposits, although they provide certain “peace of mind” for property owners when renting their second homes to strangers, they can also result in loss of business revenues and unnecessary complaints on both sides.
One alternative to security deposits is for owners to consider purchasing accidental rental damage (ARD) insurance; an inexpensive way for property owners to protect their properties up to $3,000 for accidental property damages by renters during their stay. In the past, these types of insurances were not available for vacation rentals, however, last year RENTalo partnered with TravelGuard, a leading travel insurance company. TravelGuard offers vacation rental property owners the opportunity to purchase ARD insurance for as little as $45 to $69, and protect their homes for $1,500 to $3,000 from any accidental damages caused by guests during their stay. This fee is usually paid by the owner and added to the rental fees paid by the traveler as part of the reservation. Here are some key reasons why you should consider replacing the old-fashion “security deposits” business practice with the purchase of the ARD insurance:
- When given the choice, 99% of the travelers prefer to pay a non-refundable fee of $45 or $69 instead of a refundable fee $1,500 or $3,000 as a security deposit. You can still offer ADR insurance as an option, although most owners prefer to bundle it as part of the rental cost in order to secure a reservation.
- Generally, vacation rental businesses get less than $1,500 in security deposit, and when “accidents” happen, they end up paying a lot more out-of-pocket.
- Each accidental rental damage insurance fee can cover up to 6 months of rental.
- According to recently TravelGuard’s stats, insurance claims are processed immediately and payments are usually sent within 30 days from the date of the original claim.
Click here to learn more about Accidental Rental Damage Insurance.