Sally owneda house that would cost $200,000 to replace today. Sally took out an insurance policy for only $100,000, reasoning that any damage that would take place would likely be under that amount. Subsequently, there was a fire that caused damages of $50,000 to Sally's house.

Required:

a)Explain the problems Sally might run into when she tries to collect $50,000 in damages on her policy.

b)Explain how an insurance contract avoids being void as a wager.