During a day trip to Toledo, a thief entered my room using the keys, and ransacked it, cutting my bag open with a penknife. Only money (in different currencies) got stolen, but it added up to about 200euros in value. The person in charge (that night) said if I made a police report, I would be able to claim compensation via their insurance policy. So I made the police report (which was really inconvenient since the police there hardly speak English) but the next morning, another staff said that they probably may not be able to give me compensation for my lost money since I could have just made up any amount to take advantage of the situation (which is ridiculous because I could make up any other valuable items that I "lost" too).
Anyway they did however replaced for my torn bag with a cheap low quality bag. They also refused to check their security cameras which was located right outside my room, to identify the thief claiming that they would have to go through their security company first and promised to email me if there had been any news. It's been 4 months since that ordeal. No news til now.
The responsibility clearly falls on the hostel for their negligence in terms of security. They do not allow guests to bring the keys out with them (which is fair enough). Instead, guests must surrender their keys to the reception, where all the keys are hung and easily accessible since the receptionist is not always there. So anyone can just grab a key and enter any room they like when the receptionist is absent.
Lastly, I would never recommend this hostel, simply because safety comes before service, cleanliness, location, etc.