A couple from Atlanta buys a stilt home on a canal in Marathon, planning to use it a few weeks a year and rent it the rest of the time. Before closing, their real estate agent mentions that not every home in the Keys can legally be rented by the week, and their lender asks for proof of wind and flood coverage. Within a few days the couple learns three things about owning a rental in the Keys: the local rules come first, the insurance follows the local rules, and almost every property here has to be insured for both wind and water.
The Florida Keys have had vacation rentals for far longer than the booking platforms have existed. That long history comes with a set of local regulations, building characteristics and storm exposures that make the Keys different from any other rental market in the state. Our overview of short-term rental insurance in Florida explains how these policies are put together.
Confirm the Property Can Be Rented Before Insuring It
Vacation rental rules in the Keys are set by Monroe County and by each of the incorporated cities, including Key West, Marathon, Islamorada and Key Colony Beach, and they are not the same from one jurisdiction to the next. Depending on where a property is located, renting it for short stays may require a local vacation rental license or permit, may be limited by zoning, or may not be allowed at all. In Key West, transient rental licenses are tied to specific properties and zoning, and they are not available everywhere in the city.
This matters for insurance because coverage is written on the assumption that the property is being used lawfully and as described on the application. A home rented in violation of local rules can complicate a claim, invite fines and create questions about whether the use was disclosed to the carrier. Owners should confirm the property’s status with the local government, and keep copies of any license or permit, before buying insurance for rental use.
The Right Kind of Policy for a Rental
A standard homeowners policy is written for a home the owner lives in, and most forms limit or exclude regular short-term rentals. A Keys home rented by the week usually needs a dwelling policy written for rental use or a dedicated short-term rental program that includes liability for paying guests. Owners who use the home part of the year should make sure the policy reflects both the personal use and the rental use, so neither is left uncovered. Our guide to dwelling policies for Florida rental property owners explains how those forms differ.
Wind Coverage in the Keys
The Keys sit low on a narrow island chain with open water on both sides, and the hurricane exposure is among the highest in Florida. Carriers that write property in the Keys look closely at the age of the roof, construction, opening protection and the elevation of the living area. Many Keys homes are elevated on pilings or block, which helps with flood but does not reduce the wind exposure.
Wind coverage may be included in the property policy or written separately, depending on the carrier and the location, and hurricane deductibles are typically a percentage of the insured value. On an expensive waterfront home, a percentage deductible can mean a large amount out of pocket before the policy pays. Owners should know exactly what that number is and plan for it.
Flood Is Close to Universal
In most of the Keys, flood is not a question of if a property is exposed but how much. Storm surge can cover entire islands, and even elevated homes can see damage to ground-level enclosures, equipment, stairs and anything stored underneath. Flood is excluded from homeowners and dwelling policies, so it has to be insured separately through the National Flood Insurance Program or a private flood carrier.
The details matter. NFIP coverage below the lowest elevated floor is limited, and contents in ground-level enclosures may not be covered. NFIP policies also generally have a 30-day waiting period. Private flood policies can offer different limits and sometimes coverage for lost rental income, but terms vary by carrier. Our comparison of NFIP and private flood insurance explains the tradeoffs.
Evacuations, Cancellations and Lost Income
The Keys connect to the mainland by a single highway, and visitors are typically ordered to leave well before a storm arrives. For a rental owner, that means canceled bookings even when the house is never damaged. Loss of rental income coverage generally pays only when the home becomes uninhabitable because of a covered loss, not when guests cancel because of an evacuation order. Some policies include limited coverage when a civil authority prohibits access to the property, but the conditions are specific.
When a storm does cause damage, repairs in the Keys can take longer than on the mainland because contractors, materials and permits are all in high demand. An owner relying on rental income to carry the mortgage should know whether the policy includes fair rental value and how long it would pay.
Docks, Boats and Water Activities
Many Keys rentals are sold on water access: a dock for fishing, kayaks for the mangroves, a boat lift for guests who bring or rent a boat. Each of those features adds liability. A guest who slips on the dock, falls from a ladder or is hurt using equipment provided with the house creates a claim the owner’s policy has to address, and some rental programs exclude watercraft or water activities. If a boat is offered to guests, it needs its own coverage, and many boat policies exclude rental to others. Owners should list every amenity for their agent and confirm which ones are covered.
Liability Limits and Umbrellas
Visitors to the Keys come for the water, and rental homes here often include pools, decks, outdoor showers and stairs to elevated living areas. Higher liability limits are common for rental owners, and an umbrella policy can add another layer, but not every personal umbrella covers a property rented to others. Booking platform host protection programs can help with some claims, but they carry conditions and are not a substitute for a policy the owner controls.
Worth Confirming With Your Agent
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Whether the property has the local license or permit needed for short-term rentals
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Whether your policy is written for rental use and reflects any personal use
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Your hurricane deductible and how wind is written on your property
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Flood coverage for the building and contents, including ground-level enclosures
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Whether lost rental income is covered, and what happens with evacuation cancellations
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Which docks, boats and water amenities are covered or excluded
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Whether your umbrella extends to a property rented to guests
This article is general information and is not legal advice.
Talk to Prestige Insurance Group
Prestige Insurance Group works with vacation rental owners throughout Florida, including the Keys, and we place rental, wind and flood coverage through specialty markets that write island properties. If you own a rental in the Keys or are about to buy one, we can review your coverage and help you understand what the property needs.
Call the office nearest you. Se habla español.
Orlando: 407-993-2331
Miami: 305-969-8776
Stuart: 772-247-3788
Prestige Insurance Group, License L057894
