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You are here: Home » Resources » Articles » When Do You Need to Think About Seismic Risk?

August 22, 2011

When Do You Need to Think About Seismic Risk?

By Joseph Derhake, PE

How Do You Know When You Need to Consider Seismic Risk? Several Seismic Zone Maps Can Provide Direction.

Most structured finance lenders—CMBS, Fannie Mae, Freddie Mac—and most life companies require a Seismic Damageability Assessment, a.k.a Probable Maximum Loss Report, if the asset being underwritten is in an area of the country with high seismic activity.

A lot of people translate this to “everything in California”. Actually, 15 states have high seismic zones, and as exhibited yesterday with a 5.8 earthquake in Virginia, even relatively low-risk areas can be subject to major seismic activity.

U.S. Seismic Maps

So how do you know when you need to think about seismic risk? There are lots of maps of seismic activity for the United States, so which map should an underwriter use? The U.S. seismic map that almost everyone uses is seismic map from the Uniform Building Code (1997). This map is integrated into one of the ASTM Standards (E2557 Standard Practice for Probable Maximum Loss (PML) Evaluations for Earthquake Due Diligence Assessments). It is typical to require Probable Maximum Loss Reports in areas classified as Zones 3 or 4 by this map.

Continuing reading the GlobeSt blog here.

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