Probable Maximum Loss (PML)
Definition
An estimate of the maximum loss an insurance portfolio or property is likely to experience from a single earthquake event. A key metric for insurers and reinsurers.
Example
The building's PML was assessed at 25%, meaning a major earthquake could cause 25% loss of value.
Related Terms
Related Guides
Do You Need Earthquake Insurance? A Complete Guide
Homeowners insurance doesn't cover earthquakes. Learn who needs earthquake insurance, what it costs, and how to decide if it's worth the premium.
How Earthquake Insurance Works: Premiums, Deductibles, and Coverage
Earthquake insurance has unique deductibles (10-25% of home value) and coverage terms. Understand premiums, exclusions, and what's actually covered.
California Earthquake Authority (CEA) Explained
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Commercial Earthquake Insurance for Business Owners
Business earthquake insurance covers property damage, business interruption, and liability. Learn what commercial policies include and cost.
Catastrophe Bonds: How Wall Street Handles Earthquake Risk
Catastrophe bonds transfer earthquake risk to capital markets. Learn how cat bonds work and their role in funding disaster recovery.
The True Cost of Not Having Earthquake Insurance
Without earthquake insurance, homeowners face financial ruin. Calculate the real cost of going uninsured in a seismically active area.
Earthquake Simulation Software: Engineering Tools
Engineers use earthquake simulation software to test building designs before construction. Learn about the tools that make buildings safer.
Frequently Asked Questions
The epicenter is the point on the Earth's surface directly above the hypocenter (focus) where the earthquake rupture begins. It is typically reported as latitude and longitude coordinates. The strongest shaking usually occurs near the epicenter, though local soil conditions and fault geometry can shift the zone of maximum damage.
A seismograph (or seismometer) is an instrument that detects and records ground motion caused by seismic waves. Modern broadband seismometers can detect movements smaller than the width of an atom. Networks of seismographs around the world enable scientists to locate earthquakes and determine their magnitude within minutes.
P-waves (primary waves) are compressional waves that travel fastest through rock, arriving first at seismic stations. S-waves (secondary waves) are shear waves that arrive later but cause more ground shaking. P-waves travel through solids, liquids, and gases; S-waves only travel through solids. The time difference between them helps determine earthquake distance.
The hypocenter (or focus) is the point within the Earth where an earthquake rupture initiates. It is described by latitude, longitude, and depth. The vertical distance between the hypocenter and the surface directly above is the earthquake's depth, which strongly influences how the earthquake is felt at the surface.
Seismology is the scientific study of earthquakes and the propagation of seismic waves through the Earth. It encompasses earthquake detection, location, and characterization; Earth's internal structure; seismic hazard assessment; and earthquake engineering. Seismologists use data from global seismograph networks to study these phenomena.