Assuming that the sum insured is adequate, what is the measure of indemnity used in the case of the total loss of a building?

The correct measure of indemnity in the case of a total loss of a building, assuming that the sum insured is adequate, is the cost of reconstruction at the time of the loss. This approach aligns with the principle of indemnity, which aims to restore the insured to the same financial position they were in immediately before the loss occurred.

Using the cost of reconstruction at the time of the loss considers current market conditions, construction costs, and any necessary updates to building codes or regulations that may have changed since the original construction. This ensures that the policyholder receives enough compensation to rebuild the property to its former state, thereby fulfilling the insurer's obligation in the event of a total loss.

Other options, such as the cost of reconstruction at the time of policy inception or the original purchase price, do not accurately reflect the current value of the property or the necessary funds required to reconstruct it. These measures could potentially leave the insured under-compensated or unable to rebuild to the required standards. Similarly, considering the original purchase price less wear and tear does not account for the real-time costs associated with reconstructing the building to current specifications.