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OperationsLast updated: February 12, 2026

Damage Waiver

Also known as:damage protectionaccidental damage insurance

A damage waiver is a non-refundable fee charged to guests that provides coverage for accidental damage to a vacation rental property during their stay. Unlike a traditional security deposit (which is refundable if no damage occurs), a damage waiver functions more like insurance — guests pay a smaller fixed fee and are covered for accidental damage up to a specified amount. Damage waivers are increasingly popular because they reduce booking friction, eliminate deposit management, and provide more reliable coverage for property managers.

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Why this matters for property managers

A damage waiver removes the security-deposit barrier that makes guests hesitate at checkout, which can lift conversion while still giving you a source of funds when accidents happen. As a per-booking fee it can also become a modest, predictable revenue stream across a busy calendar. The catch is coverage: waivers typically apply to accidental damage only, with caps and exclusions, so relying on one for intentional damage or major losses can leave you exposed unless it is paired with proper insurance.

Frequently Asked Questions

What is the difference between a damage waiver and a security deposit?

A security deposit is a refundable hold returned after checkout if no damage occurs, while a damage waiver is a non-refundable fee that provides damage coverage like insurance. Damage waivers are simpler to manage and create less friction for guests.

How much does a damage waiver typically cost guests?

Damage waivers typically range from $29 to $199 per stay, depending on property value, coverage limits, and provider. Coverage limits usually range from $1,000 to $5,000 for accidental damage. The fee is significantly less than a traditional security deposit hold, which makes damage waivers more appealing to guests and can improve booking conversion rates compared to requiring a large refundable deposit.

Do damage waivers cover all types of property damage?

Damage waivers typically cover accidental damage such as broken furniture, stained carpets, or damaged appliances. They usually do not cover intentional damage, theft, or damage from unauthorized parties or pets unless specifically included. Coverage terms and exclusions vary by provider, so property managers should review policies carefully. Many managers combine damage waivers with guest screening to minimize risk from both accidental and intentional damage scenarios.

Why are damage waivers becoming more popular than security deposits?

Damage waivers are gaining popularity because they reduce booking friction, require no deposit management or refund processing, and provide more predictable coverage. Guests prefer paying a small non-refundable fee over having hundreds of dollars held on their credit card. For property managers, damage waivers generate consistent ancillary revenue and eliminate disputes over deposit refunds. Many PMS platforms including Hostaway integrate with damage waiver providers for automated collection at booking.

Related Terms

Dispute ResolutionGuest ScreeningLiability InsurancePayment ProcessingProperty Condition ReportSecurity DepositShort-Term Rental InsuranceSelf-InsuranceUmbrella Policy

Related Guides

  • Waivo — Waivo is a damage waiver backed by insurance, not an insurance policy. See its $500 to $20,000 limits, $0 deductible, and the Waivo+ liability option.
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