Most solutions try to solve the same problem (protecting the property from loss) but they handle coverage and the customer experience differently. Some tie protection to renter credit and fees. Others require residents to enroll and share financial data. A newer model replaces deposits entirely with true lease insurance and provides coverage to the property.

Below is a breakdown of the major deposit coverage models and what truly matters for operators when assessing risk, cost, and experience. OR Here’s a closer look at Below is a breakdown of the major deposit coverage options and the key factors operators should consider when evaluating them.

Traditional Security Deposits: Inadequate Funds Held By The Property

Traditional deposits were not designed for today’s renters and operators.
The model is simple on the surface. Renters pay a lump sum upfront and the property holds those funds in case of damage or unpaid rent. In practice, this structure creates several challenges:

• Deposit amounts are often insufficient relative to the true cost of loss.
• Cash remains idle for the duration of the lease instead of preserving resident financial flexibility.
• Site teams absorb the administrative burden of collecting, tracking, and refunding deposits.
• Move-out frequently introduces legal and operational risk due to disputes over deductions.

Deposit amounts are driven by resident affordability, not by the actual risk profile of the property.

Deposit Alternatives: Surety Bonds Marketed As “No Deposit”

Many deposit alternatives are marketed as “no deposit,” but in practice they rely on a surety bond.
Here’s how these programs typically work:

• The resident enrolls and pays a nonrefundable fee, often priced based on credit.
• The bond provides limited reimbursement to the property for damage or unpaid rent.
• After a claim is paid, the resident may be pursued for repayment of the same amount.

As a result, residents can effectively pay twice: once upfront for the bond and again later, often through collections, if a claim occurs. This dynamic can lead to confusion, unexpected expense for residents, and complaints that ultimately reflect back on the property, even when the community is not the party collecting.
From a coverage perspective, the protection is tied to the individual resident, not to a property-level risk model.

Lease Guarantees: A Screening Tool, Not a Risk Solution

Lease guarantee programs serve a different purpose.

They are designed to help residents qualify when they do not meet standard screening criteria. A third party acts as a backstop for specific lease obligations, which can be useful in competitive or supply-constrained markets.
However, there are important limitations:

• Residents must enroll and are often priced based on income or perceived risk.
• The primary function is approval support, not deposit replacement.
• Coverage typically excludes move-out costs such as damages, cleaning, and other unit-level losses.

As a result, lease guarantees address a screening challenge rather than a risk management one, leaving operators exposed to many of the same financial and operational risks at move-out.

Deposit Replacement: Lease Insurance Built for the Property

Deposit replacement takes a different approach.
LeaseLock replaces security deposits with true lease insurance that activates at the property level through existing property management systems. There is no resident enrollment and no credit-based pricing tied to the renter.

With LeaseLock:

• Deposits are fully replaced by insurance coverage.
• Protection is structured around property-level risk, not individual renter behavior.
• Coverage and claims are managed directly within existing leasing and operations workflows.

The result is protection that aligns with the asset’s actual exposure, not a resident’s ability or willingness to pay a deposit. Properties gain reliable, insured coverage at move-out, while residents benefit from lower upfront costs and a simpler, more transparent leasing experience.

This is why deposit replacement is not just different. It is the only model designed to work for operators and residents at the same time.