You are a claims handler for an insurer. A policyholder of the insurer is DLE Ltd, the owner and operator of a distribution warehouse. DLE Ltd has a commercial combined insurance policy. DLE Ltd reports a claim for a loss to its distribution warehouse, which was caused by fire. Upon investigation, it is determined that the fire was started deliberately. DLE Ltd had a similar claim 18 months ago and the insurer suspects arson on the part of the policyholder. The claim includes the following elements: Damage to the building. Damage to the stock, some of which was owned by third parties. Damage to the machinery.

a) Identify the likely basis of indemnity and settlement you will adopt in relation to the stock. (4) (b) Explain the likely basis of indemnity and settlement you will adopt in relation to the machinery. Refer to one relevant case in support of your answer. (6) (c) Discuss the likely basis of indemnity and settlement you will adopt in relation to the building. Refer to one relevant statute in relation to your answer.