| has gloss | eng: Probable Maximum Loss (PML) is a term used in the insurance industry as well as Commercial Real Estate. Although the definition is not consistent in the insurance industry , it is often generally defined as the anticipated value of the largest loss that could result from the destruction and the loss of use of property, with the normal functioning of passive protective features (firewalls, a responsive fire department, and proper functioning of most (perhaps not all) active suppression systems (e..g, sprinklers). This loss estimate is usually smaller than the Maximum Foreseeable Loss, which assumes the failure of all active protective features. Underwriting decisions could be influenced by PML evaluations, and the amount of reinsurance ceded on a risk could be predicated on the PML valuation. |