Tentative settlement reached in Quebec lawsuit over 1998 ice storm homeowner coverage

A Montreal-based consumer advocacy group has agreed, with 15 insurance carriers, to settle a class action lawsuit over homeowners’ coverage for additional living expenses related to the January, 1998 ice storm, which killed up to 35 and left more than a million without electricity.

Option consommateurs announced in a press release Wednesday that the 15 insurers reached an agreement in principle for an out-of-court settlement. That agreement is subject to approval by the Quebec Superior Court, in a hearing scheduled Oct. 25 in Montreal.

“The class action suit launched by Option consommateurs sought to determine, among other things, whether the insurance companies had an obligation to compensate all policyholders included in the class action for additional living expenses incurred as a result of the power outages, as well as the amount to be reimbursed,” the 15 carriers and Option consommateurs stated in separate releases. 

In its lawsuit, Option consommateurs was aiming to get compensation for policyholders whose homes became uninhabitable during the ice storm and whose coverage included additional living expenses. That storm, which took place between Jan. 4 and 10, 1998, left close to 1.4 million customers in Quebec and more than 230,000 customers in Ontario without electricity, according to Statistics Canada.

Last year, Option consommateurs settled out of court with four other companies now owned by Intact Financial Corp. Those carriers were Belair Insurance Company, Allianz Insurance Company of Canada, AXA Assurances and ING Insurance Company of Canada (Commerce Group). That settlement – valued at $12.5 million – applied to about 200,000 policyholders who lived at the time in one of the 640 municipalities covered by the action. In that agreement, approved by a Quebec court in December, 2012, policyholders received an initial payment of $50.92 for each home insurance contract.

The tentative settlement announced Sept. 11, 2013 is valued at about $40 million, bringing the total value of the settlement to $52.5 million. None of the carriers have admitted liability. 

The 15 additional carriers who have tentatively agreed to settle are:

• Allstate Insurance Company of Canada;

• Aviva Insurance Company of Canada (formerly General Accident Assurance Company);

• Desjardins General Insurance Inc.;

• Industrial Alliance Auto and Home Insurance Inc.;

• La Capitale General Insurance Inc.;

• Liberty Mutual Insurance Company;

• L’Unique General Insurance Inc.;

• Optimum Insurance Company Inc.;

• Promutuel Verchères Société Mutuelle d’assurance Générale;

• SSQ Société d’assurances Générales Inc.;

•The Canadian Union Insurance Company;

•The Missisquoi Insurance Company;

• The Personal General Insurance Inc.;

• The Wawanesa Mutual Insurance Company; and

• Traders General Insurance Company.

Policyholders wishing to opt out of the settlement must notify the court in writing. In order to be eligible, a policyholder must have lived in one of the 640 municipalities covered in the class action and must have had a homeowner policy with one of the 15 insurers. 

The 1998 ice storm was the most expensive disaster in Canadian history when measured by insured losses of about $1.295 billion (not adjusted for inflation), according to a report released earlier this year by Property and Casualty Insurance Compensation Corp. However, the Insurance Bureau of Canada recently suggested it has “little doubt” that when final numbers are in, the floods last June in Alberta will rank as the country’s most expensive insured loss event. 

According to a Statistics Canada document, the 1998 ice storm brought down 1,000 power transmission towers and 30,000 wooden utility poles. The total water equivalent of precipitation exceeded 73 mm in Kingston, Ont., 85 mm in Ottawa and 100 mm areas south of Montreal. Those totals included ice pellets and snow but was mainly in the form of freezing rain. The previous Montreal freezing rain record, which left 30 to 40 mm of ice, had been set in 1961, according to Statistics Canada.

“The geographic extent of the storm was enormous, stretching from Georgian Bay to the Bay of Fundy,” according to Environment Canada. “The freezing precipitation held on for more 80 than hours, nearly double the normal annual total.” Environment Canada reported up to 35 died in the storm.