@Bill1166 To answer your question: There is no point whatsoever in the security deposit. It is not charged when the guest books neither is it even reserved on their card. It is just one of the daft things Airbnb does to give hosts a false sense of security.
I suggest you go back to Airbnb and say that as the guest will not pay please would they pay under the $1m host guarantee. Sadly you will then find that this is another smoke and mirror concept from Airbnb. Do let us know how you get on.