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Note 16 - Warranty Costs | 12 Months Ended
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Oct. 31, 2024
Warranty Costs |
Warranty Costs | 16. Warranty Costs General liability insurance for homebuilding companies and their suppliers and subcontractors is very difficult to obtain. The availability of general liability insurance is limited due to a decreased number of insurance companies willing to underwrite for the industry. In addition, those few insurers willing to underwrite liability insurance have significantly increased the premium costs. To date, we have been able to obtain general liability insurance but at higher premium costs with higher deductibles. Our subcontractors and suppliers have advised us that they have also had difficulty obtaining insurance that also provides us coverage. As a result, we have an owner-controlled insurance program for certain of our subcontractors whereby the subcontractors pay us an insurance premium (through a reduction of amounts we would otherwise owe such subcontractors for their work on our homes) based on the risk type of the trade. We absorb the liability associated with their work on our homes as part of our overall general liability insurance at no additional cost to us because our existing general liability and construction defect insurance policy and related reserves for amounts under our deductible covers construction defects regardless of whether we or our subcontractors are responsible for the defect. For the years ended October 31, 2024 and 2023, we received $4.7 million and $4.3 million, respectively, from subcontractors related to the owner controlled-insurance program, which we accounted for as reductions to inventory. Additions and charges in the warranty reserve and general liability reserve for the years ended October 31, 2024 and 2023 were as follows:
|  | Year Ended October 31, |
(In thousands) |  | 2024 |  |  | 2023 |
Balance, beginning of period |  | $ | 98,919 |  |  | $ | 97,719 |
Additions: Selling, general and administrative |  |  | 8,891 |  |  |  | 7,140 |
Additions: Cost of sales |  |  | 10,608 |  |  |  | 6,807 |
Charges incurred during the period |  |  | (32,004 | ) |  |  | (22,080 | )
Changes to pre-existing reserves |  |  | 2,977 |  |  |  | 9,333 |
Balance, end of period |  | $ | 89,391 |  |  | $ | 98,919 |
Warranty accruals are based upon historical experience. In fiscal 2024, we recorded an increase of $3.5 million to our construction defect reserves as a result of our claims history. This increase is reflected in the changes to pre-existing reserves in the table above. The majority of the charges incurred during fiscal 2024 represented payments for construction defects related to the settlement of one litigation matter.

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- Definition The entire disclosure for standard and extended product warranties and other product guarantee contracts, including a tabular reconciliation of the changes in the guarantor's aggregate product warranty liability for the reporting period. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 460 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a)(4) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482425/460-10-50-4 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 460 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a)(5) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482425/460-10-50-4 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 460 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482425/460-10-50-4 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 460 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482425/460-10-50-4 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 460 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482425/460-10-50-4 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 460 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482425/460-10-50-4 + Details
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