A group of property and casualty insurance companies has agreed to pay about $40-million to settle a lawsuit filed on behalf of Quebec residents who had home insurance during the ice storm of 1998, Canada’s most expensive natural disaster.
Allstate Insurance Company of Canada and Desjardins General Insurance Inc. were among the 19 insurers named as defendants in a class action lawsuit filed to the Superior Court of Quebec and authorized in 2005.
The lawsuit was filed by a non-profit consumer interest group called Option Consommateurs, and its target was to get additional compensation for policy holders whose living expenses built up when their homes were uninhabitable as a result of freezing cold temperatures and power and water outages across the province.
In some areas, these conditions lasted for weeks. Thirty people died in Canada as a result of the disaster. Total costs mounted to more than $6.2-billion in today’s equivalent dollars.
On Wednesday, 15 of the insurance companies reached an out-of-court agreement to pay compensation to home owners and tenants that lived in one of the 640 municipalities targeted by the class action.
This could amount to more than 690,000 policies covered by the insurers in 1998. This payment is in addition to the $1.6-billion insurers have already paid to consumers to cover damages from this weather event that ravaged not only Quebec, but parts of Ontario and New Brunswick.
All the companies deny any wrongdoing or liability despite agreeing to settle.
The other four of the 19 original defendants, including Canada’s largest property and casualty insurer Intact Financial Corp., already came to a $12.5-million agreement with the class action group in October last year.
The settlement agreement states that insurers contest the allegations because additional living expense coverage depends on the kind of contract a policy holder has, and only applies in certain situations.
But in the end the two parties agreed that to continue the lawsuit would be costly for both sides and agreed to settle. The highest sum of nearly $12-million will be paid by Desjardins.
Each class member will receive an initial cheque for at least $50.92 as a result of the agreement. If enough people who sustained damages in the ice storm 15 years ago cash those cheques, the insurers could have to pay more than the $40-million. But if there are funds left, there might be a second distribution of the remaining funds.
The agreement is tentative and will need to be approved by the Quebec Superior Court on Oct. 25.