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Security Deposit Waiver - Overview & Setup
Security Deposit Waiver - Overview & Setup

Also called Accidental Damage Protection, this article reviews how to become a part of that program

Brent Kleinheksel avatar
Written by Brent Kleinheksel
Updated over a week ago

Benefits of Offering the Security Deposit Waiver (SDW)

  1. STOP collecting security deposits. Security deposits are one of the most inefficient processes that many vacation rental company's currently utilize. Whether it be the hassle of collecting and refunding security deposits or the hassle of accounting for security deposits, or the inevitable guest confrontation and risk to your online reputation when you withhold a security deposit, the whole system can be eliminated by using a Security Deposit Waiver (Accidental Damage Protection).

  2. REDUCE the risk to your online reputation. Security deposits put your online reputation at risk. Online review sites are everywhere these days. Even when a guest's security deposit is legitimately retained, you will encounter that guest that vehemently denies any wrongdoing. If you charge for the damage, even if the guest has had a wonderful stay at your property, many times they will logon to their favorite vacation rental review site and air their grievances to the world. The number of bookings lost as a result of that one bad review will far surpass the amount charged for the damage. SDW allows you to file a claim online without having any contact with the guest, effectively eliminating any chance of a negative review and within 14-21 days a reimbursement check (or ACH) will be dispensed.

  3. INTEGRATED policy issuance and claims reporting. SDW is paid for by the guest, requiring no effort on your part.

Requirements for Offering Damage Protection

  1. There is no guest option for choosing either to pay a security deposit or pay a damage protection fee. That just gets too messy and results in properties being left unprotected.

  2. Damage protection is mandatory on all invoices. Of course there will come the occasional time when it's removed for one reason or the other, but that needs to be the exception not the rule.

  3. Training is mandatory. Training takes about 45 minutes and assures that all aspects of the protection have been reviewed and are understood by the property manager. Damage protection is easy, but there are a few rules about the timing of claims and timing of policy issuance that you must understand. There are also rules surrounding claim documentation and what is covered and what is not. It's all mostly common sense, but if you aren't up to speed, then the products will not work for you.


Why is Training Required?

Training is required to assure that the damage protection products meet client expectations. Specifically we will review the general exclusions of the policies as well as the strict submission windows that are required to assure the product works as advertised. Since 98%+ of all reimbursement requests get paid, and since there are no claims adjusters coming to the property, the products only work when the submission rules are understood and followed and when the general exclusions are clearly read and understood.

Many many property managers use damage protection in lieu of security deposits. The products work exceptionally well. However they only work for those that run a tight ship and make an effort to understand the submission policies and exclusions. For others, the products can cause grief when they attempt file a claim for something that would not be covered. WE ATTEMPT TO AVOID THOSE SITUATIONS VIA THE MANDATORY TRAINING.


Accidental Damage Protection reimbursements will not be provided for any loss or damage due to:

(a) Natural Disaster;

(damage resulting from (or as a result of) wind, rain, hail, heat, cold, etc.. This would be damage more appropriately covered by a HomeOwner policy.)

(b) intentional acts of an Guest;

(c) gross negligence by a Guest;

(damage from inebriation, drunkenness, anger, altercations, etc..)

(d) any cause, if the Guest does not report the loss or damage to the staff of the Rental Property by the Departure Date;

(e) normal wear and tear of the Rental Property unit;

** almost all plumbing related issues, most appliance related issues, most vacuum cleaner repairs, etc would not reimbursable. The reality is that things break on their own through use, wear and sometimes manufacturer defect. **

** In our experience, normal wear and tear is normally not an issue unless a homeowner is seeking reimbursement for an item that just "broke" and wasn't the result of any accidental action by the guest. **

** Now if the accidental action of the insured directly causes the damage then of course, the damage would be reimbursable. Nearly all furniture related breakages, repairs, replacements are covered by the damage protection products. **

(f) loss of use of the Rental Property unit;

(g) theft or damage to any property owned by or brought by a Guest onto the Rental Property premises;

(h) theft or damage caused by anyone visiting other than a Registered Guest;

(i) theft without a valid police report;

(j) damage without a valid police report unless the damage is caused by a Registered Guest;

(k) Damage or theft in a Rental Property unit if then umber of persons occupying the unit exceeds that unit’s occupancy limit.

(l) Damage from a pet in a property that is advertised as not being pet friendly. Cats are NEVER covered.

(m) Costs resulting from an action of the Guests pertaining to having to reconfigure the property's wifi, Internet or TV remotes.

(n) All cleaning and disposition costs related to the accidental (or non-accidental) death of a Registered Guest or other guests in the property. 

Adding Damage Protection to Properties

Go to the Settings > Application Options > Damage Protection Plans area of Lodgix.
Once trainining is complete, this is where you will set the damage protection into Live Mode.   However this is not possible until training has been completed.

Additionally, if you have a separate individual who will be responsible for communicating re: claims,  that person's email would be entered here.  Generally that field can be left blank and all correspondence will be with the account administrator.

The account must be in LIVE MODE to issue real policies. Account will not be allowed to switch to LIVE MODE until training is complete and the trial period is over.

Training takes about one hour.  Once training is complete and the terms of service has been digitally signed, we will sign off on your account to offer damage protection products.

The next step is to add the products to your properties.

Go to the Deposit / Fees / Taxes / Services area of Lodgix

  1. Go to the Damage Protection tab

  2. Select the level of coverage you require ($1500 or $3000) and edit the plan to change the name, price, have it taxed, etc..



if you want to add or remove from individual properties, then change the "Containing" option to "Not Containing" (see #4 above) which will show all properties NOT CONTAINING the damage protection plan selected. You can then individually add the plan to selected properties.

Accidental Damage Protection Revenue Share

Accidental Damage Protection is purchased at the wholesale rate and sold at the retail rate. The wholesale rate is set by Lodgix and determined by estimated volume. Please make sure to review pricing during training. Your credit card on file with Lodgix is billed at the beginning of the month for the wholesale rate of all policies issued in the previous month. . All income from the damage protection products flows into one account (bank account tied to your merchant account) while the cost of the policies is billed to whatever credit or debit card is on file with Lodgix.

RE: Airbnb Invoices and Damage Protection

Airbnb offers ONLY a cleaning fee. As such, when damage protection is enabled for a property, it will be added on to any cleaning fee that you have setup within the Airbnb integration page here:

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