Covered Claim Definition

Very little light is shed on the meaning of section 1063.1, subdivision (c)(1) by history. The Legislature amended the "covered claims" definition in 1987 by striking "arising out" and inserting "within the coverage" before "of an insurance policy of an insolvent insurer." (Stats. 1987, ch. 833, 1, p. 2661). This revision first appears in Assembly Bill No. 1771 as amended in the Senate June 30, 1987. None of the legislative history materials provided to us by the Legislative Intent Service disclose the reason for this change, and no court has addressed the reason for, or effect of, this particular amendment. This is the only revision in the portion of the definition quoted above since the original enactment of section 1063.1 in 1969. (See Stats. 1969, ch. 1347, 3, p. 2700.) The court in Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal. 3d 775 244 Cal. Rptr. 655, 750 P.2d 297 (Issacson) noted the 1987 amendments to sections 1063.1 and 1063.2, which were inapplicable in that case due to their effective date. Because of this, the court said it would not discuss the amendments, "other than to note that they further restrict the definition of what constitutes a 'covered claim.' " (44 Cal. 3d at p. 780, fn. 1.) In R. J. Reynolds Co. v. California Ins. Guarantee Assn. (1991) 235 Cal. App. 3d 595, 600, footnote 3 1 Cal. Rptr. 2d 405, the court noted the 1987 amendment to section 1063.1, subdivision (c)(1) but did not address the effect of the revision. The 1987 amendment to section 1063.1, subdivision (c)(1) does appear to restrict somewhat the definition of covered claims. In other words, the phrase "within the coverage of an insurance policy" appears to confine the obligation in question to policy terms and conditions more so than does "arising out of an insurance policy".