iAssociates Homepage About iAssociates PCA Directory PCA Events PCA Events

Probable Maximum Loss

The Probable Maximum Loss (PML) is a tool used to evaluate the seismic risk of a building and identify assets with high seismic risk. The Probable Maximum Loss report identifies the PML value, expressed as a percentage of the building's replacement cost and estimates the potential damage during a 475-year earthquake - the lower the percentage, the lower the expected damage. The PML value can be expressed either as the Scenario Expected Limit (SEL) or the Scenario Upper Limit (SUL). The scope of work for the Probable Maximum Loss can vary, but is primarily identified by two ASTM standards: E2026 and E2557.

When Do You Need to Think About Seismic Risk?

Most structured finance lenders - CMBS, Fannie Mae, and Freddie Mac require a Seismic Damageability Assessment, a.k.a Probable Maximum Loss Report, if the asset being underwritten is in an area of the country with high seismic activity. A lot of people translate this to California and the pacific west coast. Actually, 15 states have high seismic zones as exhibited in 2012 with a 5.8 earthquake in Virginia; even relatively low risk areas can be subject to major seismic activity.

Our Reports are Peer Reviewable

Our reports are prepared using the Thiel Zsutty method and may include, but not be limited to, the following assessments:
Level 1 Building Damageability Assessment
Level 1 Building Stability Assessment
Level 1 Site Stability Assessment
Our reports will show the methodology for calculating the 'b' value with calculations included for peer reviewability.