Updated August 17, 2026
A probable maximum loss report, also called a seismic risk assessment, estimates the percentage of a building's replacement value likely to be lost in a major earthquake.
Lenders order them on Los Angeles multifamily and commonly set a threshold — often around 20% — above which earthquake insurance becomes a condition of the loan. The figure is driven by construction type, soft-story configuration, retrofit status, soil conditions and proximity to known faults.
A completed, permitted soft-story retrofit generally improves a building's PML result, sometimes enough to move it below a lender's threshold and remove an annual earthquake insurance premium from the buyer's expense model — which flows through to value at the cap rate.
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