Accrued Expenses

Accrued expenses at October 31, 2018 and 2017, consisted of the following (amounts in thousands):



	2018		2017
Land, land development and construction	$	213,641	$	146,168
Compensation and employee benefits	159,374		149,145
Escrow liability	32,543		45,209
Self-insurance	168,012		149,303
Warranty	258,831		329,278
Deferred income	42,179		42,798
Interest	40,325		36,035
Commitments to unconsolidated entities	10,553		8,870
Other	48,123		52,547
	$	973,581	$	959,353

At the time each home is closed and title and possession are transferred to the home buyer, we record an initial accrual for expected warranty costs on that home. Our initial accrual for expected warranty costs is based upon historical warranty claim experience. Adjustments to our warranty liabilities related to homes delivered in prior periods are recorded in the period in which a change in our estimate occurs. The table below provides a reconciliation of the changes in our warranty accrual during fiscal 2018, 2017, and 2016 as follows (amounts in thousands):



	2018			2017			2016
Balance, beginning of year	$	329,278		$	370,992		$	93,083
Additions - homes closed during the year	37,045			31,798			28,927
Addition - liabilities acquired				1,495
Increase in accruals for homes closed in prior years *	6,162			6,226			26,689
Reclassification from other accruals				1,082
Increase to water intrusion reserves **							267,258
Charges incurred	(113,654		)	(82,315		)	(44,965		)
Balance, end of year	$	258,831		$	329,278		$	370,992

The fiscal 2016 amount included (i) a charge of $9.3 million, which is included in “Cost of revenues” in our 2016 Consolidated Statement of Operations and Comprehensive Income and (ii) $17.3 million of non-water intrusion warranty charges expected to be recovered from our insurance carriers and suppliers, which we recorded as a receivable at October 31, 2016 and is included in “Receivables, prepaid expenses, and other assets” on our 2016 Consolidated Balance Sheet.

The fiscal 2016 amount included (i) a charge of $125.6 million, which is included in “Cost of revenues” in our 2016 Consolidated Statement of Operations and Comprehensive Income and (ii) $141.7 million of water intrusion warranty charges expected to be recovered from our insurance carriers and suppliers, which we recorded as a receivable at October 31, 2016 and is included in “Receivables, prepaid expenses, and other assets” on our 2016 Consolidated Balance Sheet.

Since fiscal 2014, we have received water intrusion claims from owners of homes built since 2002 in communities located in Pennsylvania and Delaware (which are in our Mid-Atlantic region). During fiscal 2018, we continued to receive water intrusion claims from homeowners in this region, mostly related to older homes, and we continue to perform review procedures to assess, among other things, the number of affected homes, whether repairs are likely to be required, and the extent of such repairs.

Our review process, conducted quarterly, includes an analysis of many factors applicable to these communities to determine whether a claim is likely to be received and the estimated costs to resolve any such claim, including: the closing dates of the homes; the number of claims received; our inspection of homes; an estimate of the number of homes we expect to repair; the type and cost of repairs that have been performed in each community; the estimated costs to remediate pending and future claims; the expected recovery from our insurance carriers and suppliers; and the previously recorded amounts related to these claims. We also monitor legal developments relating to these types of claims and review the volume, relative merits and adjudication of claims in litigation or arbitration.

As of October 31, 2018, our recorded aggregate estimated repair costs to be incurred for known and unknown water intrusion claims was $324.4 million, which was unchanged from October 31, 2016, and our recorded aggregate expected recoveries from insurance carriers and suppliers were approximately $152.6 million, which was also unchanged from October 31, 2016. Our recorded remaining estimated repair costs, which reflects a reduction for the aggregate amount expended to resolve claims, were approximately $177.6 million at October 31, 2018 and $251.8 million at October 31, 2017. Our recorded remaining expected recoveries from insurance carriers and suppliers were approximately $109.3 million at October 31, 2018 and $127.6 million at October 31, 2017. As noted above, our review process includes a number of estimates that are based on assumptions with uncertain outcomes, including, but not limited to, the number of homes to be repaired, the extent of repairs needed, the repair procedures employed, the cost of those repairs, outcomes of litigation or arbitrations, and expected recoveries from insurance carriers and suppliers. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that our actual costs and recoveries could differ from those recorded and such differences could be material. In addition, due to such uncertainty we are unable to estimate the range of any such differences. We believe collection of our recorded insurance receivables is probable based on the legal merits that support our pending insurance claims and the high credit ratings of our insurance carriers; however, due to the complexity of the underlying claims and the variability of the other factors described above, it is reasonably possible that our actual insurance recoveries could materially differ from those recorded. Resolution of these known and unknown claims is expected to take several years.