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Glossary

Deductible

A deductible is the amount the policyholder pays out of pocket on a claim before insurance pays. A $1,000 deductible on a $5,000 claim means the insured pays $1,000 and the insurer $4,000. Higher deductibles generally mean lower premiums.

By Andrew Bate, Co-founderReviewed by Stuart BateUpdated

Why this matters for property managers

Per-night damage insurance products often carry deductibles that exceed the typical guest damage claim, so the manager pays most claims anyway while still paying premium. A program with a self-insured retention makes that trade explicit and lets waiver revenue fund it.

Related terms

Self-insured retention (SIR)
A self-insured retention is the amount of loss a business agrees to handle itself before its insurer becomes involved. It resembles a deductible, but with a deductible the insurer manages the claim from the start; with an SIR the insured manages and pays claims until the retention is reached.
Premium
The premium is the price paid for insurance coverage, billed monthly, quarterly, or annually. In a guest damage program the guest's per-reservation fee plays the economic role of the premium for the damage layer.
Actual cash value (ACV)
Actual cash value is the replacement cost of damaged property minus depreciation. If a five-year-old couch is destroyed, ACV pays what a five-year-old couch is worth today, not what a new one costs.
Subrogation
Subrogation is the insurer's right to recover what it paid on a claim from the party responsible for the loss. If a vendor causes damage and the insurer pays, the insurer may pursue the vendor to recover the payment.

Browse every term in the insurance glossary for property managers.

Deductible: common questions

Who pays the deductible on a guest damage claim?

Depends on the program design. In a Velaris program, damage below the retention is paid from the manager's escrow, funded by guest fees; there is no separate per-claim deductible billed to the owner.

Is a deductible the same as a retention?

They are related but different: with a deductible the insurer handles the claim and bills the insured; with a retention the insured handles claims up to the threshold. See self-insured retention.

Related guides

Vacation rental damage waiver program
Read the full Velaris guide.
Security deposit alternative
Read the full Velaris guide.
Program pricing
Read the full Velaris guide.

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