For us, with family groups taking multiple cottages, whoever made the reservation is the responsible party for all of the cottages in the group -- they are almost always the one who pays the balance. If it is not a family group, then each separate household (or by cottage) in the group would be responsible for their own reservation, paying their own way.
We do not collect any kind of security or damage deposit except from wedding groups. Our terms, to which our guests agree, do say:
The renter agrees to pay in whole the costs of repair or replacement due to any damages determined by us to be caused by willful misconduct or blatant misuse, as a consequence of intentional act(s), gross negligence, or willful and wanton conduct of the renter, member of the renter’s party, or visitors to the renter or the renter’s party, and all costs of recovery including attorneys’ fees and costs.
We have not yet had to go after anyone under these terms. Accidents do happen, we don't hold guests responsible for those, although they tend to volunteer. Our cottages are pretty simple and "robust," hard to really do a lot of incidental damage to ....
We do require a reservation confirmation deposit, with the balance of the rent paid upon arrival. There is no way our guests could come in without having been made aware of what our current rates are.
In case of guests wanting to come back who we wouldn't welcome, we haven't really faced that exact situation, but I think we would just have to be honest with them and explain what the issues were with their previous stay and thus why we would be reluctant to accept them this time around. They may be totally oblivious that there was an issue with their last stay.
edited to add: I don't see any reason why you couldn't ask them for a damage deposit -- you don't necessarily have to institute this as an across the board policy for all guests, just add a line to your policies that you will require a damage deposit from guests who wish to return but who did not acquit themselves well on their previous visit (or something like that).