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Homeowners Insurance: The Difference between Actual Cash Value and Replacement Cost Value

ACV will cost you less throughout the year, but it also pays out less when you need to fix something.

GREENSBORO, N.C. — A rash of recent home fires in the Triad prompted 2 Wants To Know to remind you that sleeping with your bedroom door closed could save your life. 

"It's the difference between a 1000-degree and 100 degrees in your room,  that's a 900-degree difference that can allow you to potentially survive. Also, the carbon monoxide levels will drop from potentially 10,000 parts per minute to 1,000 parts per minute," said Theresa Knops of the Winston-Salem Fire Department

In a YouTube video, there is a simulation where two couches are on fire in the living room. One bedroom has the door closed the other the door is open. The firefighters hit the flames through the window, just like they would on the scene, and then the two rooms are revealed to a group to show them the difference. Side by side of what the closed-door room looks like versus the open-door room. One looks like there was no fire. The other is charred. 

Aside from the safety, you would also be dealing with the insurance company after this. On your Homeowner's policy, you either have Actual Cash Value or Replacement Cost Value. ACV is cheaper throughout the year, but it also pays out less when you have a claim because it takes into account the depreciation values of the items to be replaced or the home itself. 

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