<p> Home insurance claims are payed one&nbsp;of 2 ways, Actual Cash&nbsp;Value or Replacement Cash Value. Knowing the difference can save you a ton of money if/when a claim occurs.</p> <p> Actual Cash Value or ACV is based on the what the value of the lost or damaged items were at the time of you loss. For instance, say you bought a couch for $1000 a couple years back&nbsp;and it was insured on an ACV basis. You had a kitchen fire that not only did extensive damage to the kitchen, but also damaged a majority of the furtniture in the den next to it, including this couch. Depending on the formula used by the insurance company involved, they will assign a value to the furniture given an average lifespan and depreciate it based on such.</p> <p> So, that couch you paid $1000 a couple of years ago, your insurer&nbsp;might only&nbsp;pay $700 in case of a total loss.</p> <p> On the other hand,&nbsp;given&nbsp;the same circumstances as above, but in this case, your HO3 contains an RCV endorsement on your personal property. The couch that you paid $1000, the carrier would give you the amount in which to replace, $1000.</p> <p> Its pretty easy to see the difference in these two types of endorsements to homeowners policies. ACV will give you a cheaper premium, but could end up being very costly if a claim arises.</p>