[P073]

PML—probable maximum loss
The anticipated maximum property fire loss that could result, given the normal functioning of protective features (firewalls, sprinklers, and a responsive fire department, among others), as opposed to maximum foreseeable loss which is a similar valuation, but on a worst-case basis with respect to the functioning of the protective features. Underwriting decisions would typically be influenced by PML evaluations, and the amount of reinsurance ceded on a risk would normally be predicated on the PML valuation.

(See maximum foreseeable loss (MFL), and maximum possible loss (MPL).)