Credit Card Holds vs. Insurance Coverage for Short-Term Rentals
There’s an often overlooked aspect of risk management for short-term rentals: the comparison between credit card holds and insurance coverage to cover damages.
As vacation rental owners and property managers, it’s crucial to explore effective ways to protect your properties and manage potential risks. We want to dive into the key differences between credit card holds and insurance for your short-term rental properties.
Definition of Credit Card Hold
A credit card hold, also known as preauthorization, is a temporary hold on part of your credit line that you’re not able to use until funds are released. Some property owners rely on credit card holds as a form of security deposit, a loose type of financial protection against potential damages or losses during a guest’s stay. While credit card holds can offer a temporary freeze on funds, it’s essential to consider the limitations of this form of security deposit.
Holds and Security Deposits have Limited Coverage
Credit card holds only secure a specific amount of funds and may not cover all types of damage. It may not be sufficient to handle significant damages or multiple incidents. Successfully resolving damage claims through credit card holds can be challenging. Guests may dispute the charges, delaying the resolution process and potentially leaving property managers without adequate compensation.
Why Choose Short-Term Rental Insurance Coverage Over Security Deposits?
Traditional insurance policies specifically designed for short-term rentals offer comprehensive protection and financial security. Safely’s Protection Plan includes guest screening as well as short-term rental insurance for every night booked.
Commercial Insurance Offers More Protection for your Vacation Rental
Short-term rental insurance coverage provides a broader scope of protection, including property damage, liability claims, loss of income due to covered events, and additional safeguards like vandalism or theft coverage. This comprehensive coverage helps property owners mitigate potential financial risks effectively.
Short-Term Rental Insurance Means Less Risk for Property Managers and Owners
Insurance transfers the risk to the insurance company, ensuring that property owners have the necessary financial resources to address damages or losses without relying solely on credit card holds or personal funds. There is no need to chase down a guest to cover damages or become involved with OTA models of coverage which are never as easy as their marketing materials say.
A Streamlined Claims Process Means No Chasing Down Guests for Damages
Insurance policies provide a structured and streamlined claims process, allowing property owners to navigate the resolution process more efficiently. This facilitates quicker compensation for covered incidents, minimizing disruptions to business operations.
Security Deposits are No Longer the Best Solution for Vacation Rental Property Managers and Owners.
Having a short-term rental insurance policy in place helps protect your home and investment from damage you may not be prepared for. Safely’s Protection Plan, including commercial insurance and guest screening, integrates with the top property management systems and allows you to incorporate the cost of the insurance coverage into your fees. You don’t have to pass that cost to the homeowner, and you can even make a profit.
Find out why more and more property managers are leaving credit card holds behind and moving to Safely. Get a quote from Safely today.
