ASTM-E2557 Standard Practice for Probable Maximum Loss (PML) Evaluations for Earthquake Due-Diligence Assessments

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Standard Practice for Probable Maximum Loss (PML) Evaluations for Earthquake Due-Diligence Assessments



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1.1 This practice establishes standard-of-care for evaluation and classification of the financial risks from earthquake damage to real estate improvements for use in financial mortgage transactions and capital investment evaluation. As such, this practice permits a user to satisfy, in part, their real estate transaction due-diligence requirements with respect to assessing and characterizing a property’s potential losses from earthquakes. This practice is intended to address only physical damage to the property from site and building response.

1.1.1 Hazards addressed in this practice include earthquake ground shaking, earthquake-caused site instability, including faulting, subsidence, settlement landslides and soil liquefaction, earthquake-caused tsunamis and seiches, and earthquake-caused flooding from dam or dike failures.

1.1.2 Earthquake-caused fires and toxic materials releases are not hazards considered in this practice.

1.1.3 This practice does not purport to provide for the preservation of life safety, or prevention of building damage associated with its use, or both. This practice does not address requirements of any federal, state, or local laws and regulations of building construction or maintenance. Users are cautioned that current federal, state, and local laws and regulations may differ from those in effect at the times of construction or modification of the building(s), or both. This practice does not address the contractual and legal obligations between prior and subsequent Users of seismic risk assessment reports or between providers who prepared the report and those who would like to use such prior reports. This practice does not address the contractual and legal obligations between a provider and a user, and other parties, if any.

1.1.4 It is the responsibility of the owner of the building(s) to establish appropriate life-safety and damage prevention practices and determine the applicability of current regulatory limitations prior to use.

1.2 Considerations not included in the scope: the impacts of damage to contents, loss of income(s), rents, or other economic benefits of use of the property, or from legal judgments, fire sprinkler water-induced damage or fire.

1.3 The values stated in inch-pound units are to be regarded as standard. The values given in parentheses are mathematical conversions to SI units that are provided for information only and are not considered standard.

Significance and Use

5.1 This practice is intended for use as a voluntary standard by parties who wish to undertake the seismic risk assessment of properties. The goal is for users to objectively and reliably compare the financial risks of earthquake damage to buildings, or groups of buildings, on a consistent basis.

5.2 This practice is designed to provide requirements for the evaluation of earthquake damage risk so that technical reports prepared for the evaluation and rating of seismic risk of a building(s) will be adequate for use by other entities. Potential users including, but are not be limited to, those making equity investments, lending, and financial transactions, including securitized mortgage lending by mortgage originators, loan servicers, underwriters, rating agencies, and purchasers of bonds secured by the real estate.

5.3 The use of this practice may permit a user to satisfy, in part, their requirements for due diligence in assessing a property's potential for losses associated with earthquakes for real estate transactions.


ICS Number Code 03.060 (Finances. Banking. Monetary systems. Insurance)

To find similar documents by ASTM Volume:

04.12 (Building Constructions (II): E2112 - latest; Sustainability; Property Management Systems; Technology and Underground Utilities)

To find similar documents by classification:

03.060 (Finances. Banking. Monetary systems. Insurance Including personal financial planning Information technology applications in banking, see 35.240.40)

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Publication Date

June 1, 2016

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Page Count

14 pages

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