Salvage, Mitigation and Proof of Loss: Documentation Insurers Will Demand from Restaurants

Restaurants and hospitality properties face higher-than-average exposure to property damage (fire, grease fires, water intrusion, HVAC failure, vandalism). When a loss occurs in a U.S. restaurant — whether a fast-casual in New York City, a full-service kitchen in Los Angeles, or a waterfront venue in Miami — insurers will demand rigorous documentation for salvage, mitigation and proof of loss before paying claims or pursuing subrogation. This guide explains exactly what carriers expect, provides practical checklists, includes industry pricing benchmarks, and points to next steps for maximizing recoveries and avoiding coverage disputes.

Key principles insurers apply

• Insurers expect you to protect the property and limit further loss (mitigation). Failure to mitigate can lead to denial or reduced payments.
• Documentation is evidence: photos, time-stamped videos, invoices, POS reports and chain-of-custody for discarded inventory.
• Proof of loss must be comprehensive and timely — both for property damage and business interruption (BI) claims.
• Standards and best practices often reference IICRC/NFPA protocols; follow them when possible.

Authoritative standards/resources: IICRC (restoration/cleaning standards) and NFPA 921 (fire investigation guidance). For restoration cost context, industry averages are available from trade and consumer sources (see HomeAdvisor and Angi links below).

Sources:

• HomeAdvisor — water damage restoration cost overview: https://www.homeadvisor.com/cost/water-damage/
• Angi — mold remediation cost overview: https://www.angi.com/articles/how-much-does-mold-remediation-cost.htm
• NFPA & IICRC standards: https://www.nfpa.org/ and https://iicrc.org/

Immediate 0–72 hour actions (what insurers expect right away)

1. Ensure safety and notify emergency services if needed.
2. Contact your insurer and broker; issue the First Notice of Loss (FNO) immediately.
3. Begin emergency mitigation: board-up, water extraction, temporary HVAC, odor control — retain invoices and time-stamped photos/videos.
4. Inventory visible contents and secure high-value items (wine, POS hardware, liquor inventory). Photograph serial numbers.
5. Preserve evidence for subrogation (take photos of failed equipment, collect vendor invoices and maintenance logs).

Common emergency service providers used by restaurants: SERVPRO, Belfor, ServiceMaster Restore, Paul Davis. Typical market pricing (U.S. commercial averages — subject to local labor and scope):

• Emergency board-up / temporary fencing: $200–$500 per opening (HomeAdvisor median ranges).
• Water extraction & structural dry-out: $1–$6 per sq. ft. (commercial scopes vary widely) — large-loss jobs typically run from several thousand to tens of thousands of dollars.
• Mold remediation (if present): $1,800–$6,000 for small-to-medium jobs, higher for complex remediation (Angi).
  Expect metropolitan markets (New York City, Los Angeles, San Francisco) to be 10–30% higher on labor-intensive items.

Documentation insurers will demand — by category

1) Salvage & contents documentation

• Time-stamped photos and video of all affected areas and items before, during and after mitigation.
• Detailed contents inventory (item description, quantity, condition, serial numbers, location). Use spreadsheet or inventory software (XactContents / proprietary inventory tables).
• Proof of ownership / value: purchase invoices, UPCs, credit card records, supplier invoices, P&L line items.
• Salvage log for items removed or destroyed (who removed them, date/time, reason, chain-of-custody, disposition).
• Receipts for storage services, pack-out, and cleaning.

2) Mitigation invoices & scope-of-work

• Signed contracts and itemized invoices from restoration vendors (emergency board-up, water mitigation, smoke/odor remediation).
• Daily field logs, moisture mapping, and drying equipment logs (dehumidifier/hygrometer readings). IICRC-compliant documentation is persuasive.
• Photos of temporary repairs and final repairs (before/after).

3) Proof of loss (policy-specific form)

• Completed insurer proof-of-loss form with a signed sworn statement when requested.
• Repair estimates and contractor bids (itemized). Include permit applications and final permits where applicable.
• Adjuster reports and independent estimates (Xactimate/XactContents outputs if used).

4) Business Interruption (BI) & Extra Expense

• Historic revenue data: POS summaries, daily sales reports, merchant processing statements (Square, Toast, Clover), monthly summaries for at least 12–36 months.
• Tax returns (Form 1120/1120S/1065/1040 Schedule C) and financial statements (monthly P&L and balance sheets).
• Payroll records (payroll provider reports — ADP, Paychex), staff schedules, and tipped wage documentation.
• Customer contracts, event bookings, banquet deposits lost due to closure.
• Extra expense invoices (temporary catering, relocation expenses, advertising to notify customers).

5) Subrogation and third-party evidence

• Maintenance logs and vendor contracts (hood-cleaning agreements, grease trap pump service, HVAC service records).
• Purchase orders and delivery records for suspect supplies (e.g., propane, compressed gas, third-party equipment).
• Surveillance camera footage saved with write-protected export and chain-of-custody documentation.

Example checklist to hand your adjuster within 7–14 days

• Signed First Notice of Loss and contact information.
• Photo/video package (organized by area).
• Contents inventory spreadsheet + sample receipts for high-value items.
• Contractor mitigation invoices + daily drying logs.
• Preliminary repair estimate(s).
• POS reports covering the prior 24 months (or at least the prior 12 months) and bank statements.
• Payroll reports for the same period.
• Completed proof-of-loss form (if carrier requires one) or a draft for review.

Table: Documents vs. Purpose (quick reference)

Practical examples and pricing context

• A typical small Manhattan bistro with 2,500 sq ft suffering water intrusion may see emergency mitigation + dry-out costs in the $8,000–$25,000 range depending on saturation, with mold remediation adding $2,000–$10,000 if contamination is present. (Industry averages per HomeAdvisor/Angi; NYC labor push can increase quotes.)
• A quick-service restaurant in Los Angeles that loses refrigeration overnight may incur contents spoilage losses of $5,000–$20,000 (inventory), plus refrigeration replacement and cleanup charges; mitigation vendors (SERVPRO, Belfor) will often charge an initial emergency response fee plus daily equipment rental costs.

Tip: Request itemized rental rates for dehumidifiers and air movers, and keep rental agreements; insurers will disallow vague lump-sum charges.

Common pitfalls that lead to denials or reduced recoveries

• Missing POS exports or failure to preserve merchant processor statements.
• Discarding damaged inventory without documenting quantity, condition and chain-of-custody.
• Using restoration vendors who don’t provide daily logs or moisture readings.
• Delayed filing of proof-of-loss or late submission of BI documentation (check policy deadlines).
• Failure to cooperate with carrier inspections or to coordinate loss control visits.

For deeper process knowledge, see: Insurance Claims Handling for Hospitality Incidents: From First Notice to Final Settlement.

Subrogation & expert support — prepare up front

If a third party (deliverer, contractor, equipment manufacturer) likely caused the loss, preserve evidence for subrogation. Work with forensic accountants and fire/mechanical experts early to quantify lost profits and causation. See: When to Invoke Subrogation After a Restaurant or Hotel Loss (and How to Do It) and Using Forensic Accounting and Experts to Prove Lost Profits and Business Interruption Claims.

Final practical tips for restaurant operators (U.S.-focused)

• Maintain an up-to-date digital contents inventory with purchase records and serial numbers stored off-site/cloud.
• Pre-identify restoration contractors (Belfor, SERVPRO, ServiceMaster Restore, Paul Davis) and negotiate emergency response rates if possible.
• Back up POS and payroll data daily and maintain 12–36 months archived copies.
• Train managers on immediate documentation steps and designate a claims liaison.
• If dispute arises, consider reservation of rights and early engagement with defense or coverage counsel (timing matters).

Keeping meticulous, contemporaneous documentation — photos, invoices, POS exports, payroll, vendor contracts and chain-of-custody records — is the fastest way to secure timely indemnity and to support subrogation. In major metros like New York City, Los Angeles, Chicago, Miami and Houston, expect higher mitigation and labor costs and plan budgets accordingly.

For guidance on running the claim process with your broker and carrier, see: How to Run an Effective Insurance Claim Meeting with Your Broker and Carrier.