General liability insurance for homebuilding companies and their suppliers and subcontractors is exceedingly 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, 2025 and 2024, we received $5.2 million and $4.7 million, respectively, from subcontractors related to the owner controlled-insurance program, which we accounted for as reductions to inventory.

The following table represents additions and charges to the warranty reserve and general liability reserve for fiscal 2025 and 2024:

	*Year Ended October 31,*
(In thousands)	*2025*			*2024*

Balance, beginning of period	$	89,391		$	98,919
Additions: Selling, general and administrative		10,458			8,891
Additions: Cost of sales		9,073			10,608
Charges incurred during the period (1)		(9,295	)		(32,004	)
Changes to pre-existing reserves (2) (3)		4,197			2,977
Balance, end of period	$	103,824		$	89,391

(1) The majority of the charges incurred during fiscal 2024 represented a payment for construction defects related to the settlement of a litigation matter.
(2) During fiscal 2025, we recorded a decrease of $3.4 million to our construction defect reserves as a result of our claims history, which is reflected in the changes to pre-existing reserves.
(3) Includes reserve balances acquired from unconsolidated joint ventures, as discussed in Note 20.