11. Product Warranties

The Company establishes warranty and product liability reserves (“warranty reserve”) to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to NVR’s homebuilding business. Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases. The following table reflects the changes in the Company’s warranty reserve during the three and nine months ended September 30, 2014 and 2013:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Warranty reserve, beginning of period	$	97,190		$	77,341		$	101,507		$	62,742
Provision		12,103			15,798			35,556			49,701
Payments		(14,981	)		(11,403	)		(42,751	)		(30,707	)

Warranty reserve, end of period	$	94,312		$	81,736		$	94,312		$	81,736

The warranty reserve provision for the nine months ended September 30, 2013 included a charge of approximately $15,600 to establish an accrual related to remediation of primarily water infiltration issues in a single completed community. The water infiltration issues were the result of a design issue with several products developed for and built exclusively in that one specific community. The warranty reserve provision for the nine months ended September 30, 2014 included additional charges related to this issue totaling approximately $4,000.