Guest Damage Protection & Insurance: What Property Managers Should Look For in 2025

Managing vacation rentals or short-term stays comes with plenty of moving parts, but one issue that keeps property managers up at night is guest damage. A broken table, stained carpet, or worse can quickly eat into profits and create headaches with owners. While platforms like Airbnb and Vrbo provide some level of protection, those options don’t always cover everything a manager needs. 

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That’s where having the right mix of guest damage protection and insurance becomes essential. Below, we’ll explore what property managers should look for, how to compare different solutions, and the key features that help safeguard both their business and their clients.

Why Damage Protection Is Different for Property Managers

When you manage just one property, damage protection usually feels straightforward. You pick a deposit amount or rely on the platform’s coverage and move on. For property managers, though, the picture is very different. With multiple owners, higher booking volume, and listings spread across different platforms, the risks stack up quickly.

Property managers need protection that not only covers accidents but also reduces the financial risk for owners, speeds up the claims process, and keeps net operating income steady. It also has to work in a way that does not frustrate guests or slow down bookings. Predictable cash flow is just as important as protection itself.

That is why managers typically layer their approach. They might use Airbnb’s AirCover or Vrbo’s liability protection, add third-party short-term rental insurance for broader coverage, and decide whether damage waivers or security deposits fit best for their portfolio.

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Platform Protections: What They Do and Don’t

When you rely on the big booking platforms, it is easy to assume their built-in protections have you covered. The reality is a little more complicated.

Airbnb AirCover offers hosts up to $3 million in damage protection along with $1 million in liability coverage. On the surface that sounds reassuring, but the fine print matters. Certain types of damage, such as wear and tear, maintenance issues, or unreported incidents, often fall outside the scope. Claims can also require extensive documentation and may be denied if you miss a reporting deadline or fail to provide proof. AirCover should be viewed as a safety net, not a substitute for proper insurance.

Vrbo provides automatic $1 million in liability protection that helps with third-party injury or property claims. What it does not cover is damage to your own property. If you manage as an Integrated Property Manager (IPM), Vrbo treats you as the merchant of record, which comes with its own rules. For example, you cannot market your own damage waivers directly on their platform, which limits how you structure guest protection.

Booking.com takes a different approach. The platform itself does not provide host damage protection or liability insurance. Instead, property managers are expected to set their own house rules, security deposits, and damage policies within the Booking.com system. This gives you flexibility but also puts the burden of enforcement and reimbursement on your shoulders. If a guest causes damage, you must handle the claim directly, often through deposits or third-party protection plans. Without a separate damage waiver or insurance policy in place, you are exposed to more risk.

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Damage Waiver vs. Security Deposit (PM Edition)

When it comes to protecting properties, property managers usually lean on either damage waivers or security deposits. Both have their place, but they work very differently.

Damage waivers are guest-friendly because they keep the booking process smooth and simple. Guests like knowing they do not have to put down a big chunk of money, and managers like that waivers cut down on operational hassles. The trade-off is that most waivers come with lower limits and do not cover everything. Intentional damage, theft, and certain types of loss often fall outside the coverage. Claims can also feel slow or overly detailed, which adds a layer of frustration.

Security deposits act more like a deterrent. When guests know money is on the line, they are more cautious with the property. Deposits can cover intentional damage or missing items, giving managers and owners broader protection. The downside is guest friction. Deposits can reduce conversion, spark more disputes, and add workload when it comes to refunds or chargebacks.

For managers scaling a portfolio, the decision often comes down to balancing guest experience with risk management. Waivers may help streamline operations across dozens of units, while deposits may be worth keeping in situations where the risk of intentional damage or loss is higher. Many managers adopt a hybrid approach, using waivers as the default but reserving deposits for specific homes, high-value items, or certain types of guests.

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Third-Party Guest Damage Protection & STR Insurance

Relying only on waivers or security deposits can leave big gaps in coverage, and it usually slows down payouts when something goes wrong. That’s where true short-term rental insurance and guest damage programs come in. These policies are designed to cover what the basics often miss and give property managers peace of mind.

What True STR Insurance Adds

A strong third-party policy should include:

• Intentional acts and malicious damage
• Pet damage (expected or unexpected)
• Theft of property or valuables
• Coverage for contents like furniture, beds, and linens
• Loss-of-use or rental income if the property is uninhabitable
• Higher liability limits for guest injury or third-party claims
• Faster claims and payouts compared to deposits or waivers

Notable Providers

Some of the more widely used options in the industry include:

• Obie Insurance – modern STR insurance built for landlords and property managers, with quick quotes and flexible coverage options
• Proper Insurance – comprehensive STR policies built like commercial insurance
• CBIZ – tailored coverage for short-term rentals and vacation homes
• Safely – liability, contents coverage, plus guest screening
• Property Protect – flexible damage protection programs

These programs are typically offered in two ways:

• Per-stay add-ons (charged to guests as part of booking)
• Annual policies (set per property, often replacing or supplementing homeowner coverage)

Why Obie Stands Out

Among these providers, Obie Insurance is especially attractive for property managers because it:

• Offers landlord-friendly STR policies that are easy to understand
• Provides fast online quotes without lengthy back-and-forth
• Allows you to tailor coverage to match property type, rental activity, and risk level
• Keeps pricing competitive while ensuring policies are comprehensive enough for multi-unit or multi-owner portfolios

By using a third-party provider like Obie, property managers can give owners a stronger safety net while reducing the operational headaches that come with waivers and deposits. It’s one of the most practical ways to protect both the property itself and the income it generates.

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Must-Have Coverage Elements for Property Managers

Not every policy is built with the needs of property managers in mind. The best guest damage protection or insurance should cover the basics and the surprises that often come with short-term rentals. Here are the essentials to look for:

• Primary vs. excess liability: Primary coverage pays first in the event of a claim, while excess coverage only applies after another policy has been used. Knowing the difference can save you from costly gaps.
• Building and dwelling coverage: Protects the physical structure itself in case of major damage.
• Contents and owner property: Covers furniture, appliances, and personal items that belong to the owner.
• Amenities: Pools, spas, bikes, and watercraft can all pose risks. Confirm these are included, since many policies exclude them unless added specifically.
• Pet, party, and intentional acts: These are common sources of costly claims. Look for a policy that goes beyond “accidental damage only.”
• Theft and vandalism: Essential for covering losses if guests or outside parties intentionally damage or steal property.
• Bed bugs and mold: These issues can shut down a rental for weeks. Few policies cover them, so check carefully.
• Liquor liability: Important if guests are allowed to host gatherings where alcohol is served.
• Glass and outdoor structures: Windows, patio doors, decks, and sheds should all be covered.
• Loss of income: Protects cash flow when a unit cannot be rented during repairs.
• Named insured and additional insureds: For multi-owner portfolios, make sure policies allow for clear handling of different ownership structures. Smooth certificate of insurance (COI) management builds trust with owners.
• Channel-agnostic coverage: Confirm the policy applies across all bookings, whether they come from Airbnb, Vrbo, or direct reservations.

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Operational Fit: How Coverage Affects PM Workflows

Choosing the right protection plan is not just about coverage limits. It also shapes how your team runs day to day.

Booking flow choices. Property managers often debate between holding a security deposit, charging a damage waiver, or adding per-stay damage protection. Each option affects how smooth the booking process feels for guests. Deposits can scare off some travelers, while waivers are simple but may not cover much. Per-stay add-ons usually strike a balance, offering more peace of mind without adding friction at checkout.

Claims workflow. When something goes wrong, your team’s process matters as much as the policy itself. Clear documentation, photos, and timely reporting make a big difference in whether claims are approved. For theft or intentional damage, police reports may be required, so having a standard operating procedure helps keep things consistent and reduces denials.

Accounting. Finally, think about how protection fits into your financial systems. Will guests or owners cover the cost? How will it appear on owner statements? There are also tax considerations depending on how fees are passed through. Getting this right keeps finances transparent and avoids confusion later.

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Multi-Channel Realities & Compliance

Property managers rarely stick to just one booking platform. Running listings on Airbnb, Vrbo, and direct booking sites is often the best way to maximize occupancy, but it comes with a few compliance wrinkles. For example, Vrbo has strict rules for Integrated Property Managers around selling damage waivers on-platform. That means managers often need to think about off-platform protection or use PMS-integrated solutions that can apply coverage across every channel without breaking the rules.

Local regulations can also complicate things. Some cities or HOAs require specific insurance provisions, while lenders may place restrictions that conflict with typical homeowners policies. Traditional insurance often wasn’t designed for high-turnover short-term rentals, so managers need to be sure their coverage isn’t leaving gaps. The safest move is to work with providers who understand the multi-channel landscape and can deliver a portfolio-wide solution that satisfies platforms, owners, and regulators.

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Cost & Pricing Models: What to Expect

When it comes to protecting your rentals, pricing can vary widely depending on how you structure coverage. Many property managers choose an annual short-term rental master policy, which provides one blanket of protection across the portfolio. Others prefer per-reservation damage protection, where a flat fee is charged for every booking or the rate is tiered based on factors like nightly rate or length of stay.

To give you a sense of scale, some industry programs advertise coverage of around $10,000 for about $5 per night, often with a deductible. While the numbers may look small, they add up quickly across multiple properties and a full calendar of bookings.

The real key is to look at the total risk cost per unit. That means factoring in not just premiums or fees, but also the expected loss you may need to cover and the administrative time required to process claims or disputes.

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Choosing Vendors: Evaluation Checklist for Property Managers

When it comes to picking the right damage protection or insurance partner, not all providers are created equal. The best fit is the one that balances solid coverage with smooth operations and a guest experience that doesn’t create unnecessary friction. Here are the main areas to look at when evaluating vendors:

1. Coverage

Start by checking what situations are actually covered. Look for protection against intentional acts, theft, pet damage, and common amenities like pools or bikes. High-value items should also be addressed, along with clear limits and deductibles so you know exactly where the gaps are.

2. Claims

Speed and simplicity matter. Ask about the average payout timeline and what documentation is required. A straightforward online portal or API access can make a big difference. Some vendors also help with subrogation, which reduces the admin load on your team.

3. Scale and Administration

For property managers handling multiple owners, efficiency is key. Look for bulk Certificates of Insurance, simple handling of additional insureds, and integration with your PMS or booking channels. Monthly reconciliation should be easy enough to avoid back-and-forth with your accounting team.

4. Guest Friction

Guests should not feel like they are jumping through hoops. Choose a solution with transparent terms, no extra steps during booking, and multilingual communication if you host internationally.

5. Contract Terms

Finally, dig into the fine print. Is the policy primary or excess? What exclusions apply? Are you locked in long-term, or can you cancel? For larger portfolios, check whether the vendor offers tiered pricing that scales with your business.

By working through this checklist, property managers can cut through the marketing promises and focus on finding a partner that truly supports both their operations and their owners.

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Frequently Asked Questions (FAQs)

Is AirCover enough for my owners?

Airbnb’s AirCover offers some protection, but it should not be seen as a full replacement for dedicated damage protection or insurance. It has exclusions and limitations that can leave gaps, especially when it comes to intentional acts, theft, or claims that require detailed proof. For peace of mind, property managers usually combine AirCover with their own coverage.

Can I charge both a waiver and sell per-stay protection?

You can, but it depends on the booking channel. On Airbnb you are limited to their system, while direct bookings or PMS-integrated options give you more flexibility. Always review platform rules before layering protections.

What if a guest lies or does not report damage?

This is where strong coverage makes a difference. Programs designed for property managers typically allow you to document and file a claim yourself. Taking photos and noting the condition of the property before and after each stay makes it harder for guests to dispute.

How fast do claims pay, and who gets paid, the property manager or the owner?

Payout speed varies. Platform protections often take weeks, while specialized providers may pay much faster. Funds are usually sent to the named insured, so property managers should confirm whether payments go directly to them or to the owner and set up an SOP that keeps everyone aligned.

How do I handle multi-platform bookings?

This is one of the biggest challenges. Airbnb’s protections only apply to Airbnb reservations, and Vrbo has its own set of rules. If you rely on direct bookings as well, you need a third-party policy or per-stay protection that is channel-agnostic. That way, no matter where the booking originates, your owners are covered.

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The Bottom Line

Guest damage is one of those realities that property managers cannot afford to ignore. Relying on platform protections alone leaves too many gaps, while juggling waivers, deposits, and insurance without a clear plan can frustrate both guests and owners. The right approach blends reliable coverage, streamlined claims, and policies that actually fit the way you run your business.

If you want to give your owners confidence and protect your portfolio from unexpected costs, it makes sense to explore professional insurance options built for property managers. Obie offers tailored coverage designed for short-term rentals, helping you close the gaps that platform protections miss. 

Take a look at Obie’s offerings and see how the right insurance partner can give you the peace of mind to focus on growing your business instead of worrying about damage claims.