I regularly get questions like, “Are you taking a big enough breakage deposit?”
Injuries, accidents and your liability seem to be on the back burner.
But let me answer your breakage deposit concern first.
As an owner, you want to protect your belongings against breakages. You can throw money at the problem or you make it as foolproof as possible.
After a thorough foolproof audit and making changes, the next defense is a breakage deposit.
How high should the breakage be to cover your home? Can you consider any figure you believe is high enough?
Okay. You decide to hit them hard with a high breakage deposit. But the consequence is; no more bookings. Nothing.
Obviously, we need to consider the risk. How many breakages occur and how severe are they?
- How often do we claim for breakages from guests? Probably less than 1%.
- Has our conservative breakage deposit covered these breakages? 99% of the time.
Instead of limiting or stopping bookings it’s our view to get a breakage deposit about equal to one day’s rates during high season.
But you may be risk-averse and want more. Your only choice (not really a choice) is to get your short term insurer involved. You must tell him you do short term accommodation and want insurance for breakages, accidents and liability claims.
Let’s get back to breakages:
- If breakage is more than the deposit, then insurance must kick in. It’s easier than taking legal action against the guest.
- If another non-guest with access to the home breaks something or has an accident the insurance must cover the loss.
- Obviously, if it is malicious damage the owner can take legal action.
- Get insurance and third-party liability insurance.
- Set a reasonable breakage deposit.
- Do a foolproof audit. And act on it.
In general, short term rental accommodation business is easy if you do the common sense issues well. They are simple. But relentlessly risky if skimped.
P.S. If it can break it will break. This does not mean we must change to plastic plates and glasses. Everyday use items must be easily replaceable in the blink of an eye. To claim from a guest for such accidental breakages is not ideal.