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Do you have a PML rating for your commercial real estate assets? What is PML?

PML or Probable Maximum Loss is a term the insurance industry created decades ago to reference the maximum loss an insurance company should expect to pay for a claim based on the seismic assessment of a property / building. PML, SEL and SUL are defined below. Due to advancements in technology and our ability to assess structural vulnerability as well as increase structural integrity of existing buildings PML has been renamed to more defined scopes SEL or Scenario Expected Loss and SUL or Scenario Upper Loss. The industry is no longer utilizing PML.

PML refers to Probable Maximum Loss: Tool used to evaluate the seismic risk of a building and identify assets with high seismic risk.

PML is being replaced by these more defined terms.

SEL refers to Scenario Expected Loss: Expected loss resulting from the damage experienced due to a 475-year return period earthquake. SEL has an approximate 50% possibility of exceedance. The SEL is sometimes referred to as the PML50. This is a lower standard meaning it takes less work (cost) to meet the criteria. This has a 50% chance of exceeding the damage estimate.

SUL (This is a level that opens all buyers to the building) refers to Scenario Upper Loss: 10% probability of exceedance due to the specified earthquake ground motion of the scenario considered. The most common representation of the SUL is the SUL475, associated with the 90% confidence loss estimation resulting from the damage experienced due to a 475-year return period earthquake. The SUL is sometimes referred to as the PML90. This is a higher standard but one that all lenders and insurance companies accept. This has a 10% chance of exceeding the damage estimate.

The cost difference in design is minimal between SEL and SUL. SUL is the standard for all buyers of buildings (the SUL means that retrofitting is off their list of items). An exception is essential facilities and government offices which increase to a different level (Usually 70% to 75% of code)

Expression of losses is based on a percent of the replacement cost of the structural elements of the building. Losses are for structural elements only and do not include non-structural elements such as ceilings, lights, ductwork, furniture and fixtures, mechanical and electrical equipment, or tenant improvements.


  • Mitigate Risk and Liability
  • Increase Property Value
  • Avoid Construction Cost Inflation
  • Insurance Reductions
  • Increase Marketability
  • Resiliency and Tenant Retention
  • Peace of Mind


Be prepared and have regular inspections to assess the seismic risks of your commercial real estate assets,

Posted Under: Commercial & Industrial Real Estate