[M045]

maximum possible loss (MPL)

The largest percentage of the insured property which could possibly be destroyed by the insured perils. Normally this amount would be all the property within the four walls of a structure, plus loss to adjacent property due to its proximity. An MPL estimate is invariably the ultimate in pessimism, but it is a most important concept in underwriting large risks in order to compute rates and to understand the need for capacity, as well as to appreciate all exposures. Two other expressions used from time to time, amount subject and maximum foreseeable loss (MFL), have substantially the same meaning as MPL.

(See probable maximum loss (PML).)