To me it shows a complete lack of understanding by HA on renting out a private residence to complete strangers. The Whole purpose of collecting a damage deposit is a reminder to those strangers to treat your property with some respect or they might get charged for the damage.
The old saying, "Skin in the Game" making a difference, is very true.
Always, Always get a refundable security/damage deposit. Its is a very important incentive for the vacationers to take care of the home, stay with the rules, and leave it in good condition.
This should not be built in as then it is not a stated collection. Are you really going to build in a "refundable" $500.00 to $1000.00 into your nightly rates?
With the contract properly stated about the refundable sec/dam deposit, initialed and signed contract, your duel, security/damage deposit will be a fall back for you to use.
The insurance policy is not for you. If you do not collect, you do not have a way of recouping, should the "vacationer's insurance" again not yours, can be utilized.
Homes are not hotels, you have no one looking out for you if you do not look out for yourself.
Your home, your liability, your responsibility, your $$$, take care of yourself and your property
Due to the saturation of STVRs in San Diego's beach areas, my rates are lower than they were 10 years ago now to compete with AirBnB's influx, of everybody and their brothers renting out everything from rooms to garages in San Diego. No room to build in an extra $500.00
I will keep it as a security/damage deposit.