Crystal Taman, in a photograph filed as an exhibit in the inquiry. (Taman inquiry)

The family of a woman killed in a car accident by an off-duty police officer has agreed to $300,000 compensation from the Manitoba government and City of Winnipeg.

Crystal Taman was killed four years ago when a truck driven by Winnipeg police officer Derek Harvey-Zenk, who was returning home from an all-night party, slammed into the back of her car.

Harvey-Zenk was convicted of dangerous driving causing death and is serving a two-year sentence in the community.

A lengthy public inquiry into the case was held last year.

Taman's husband Robert and the couple's three children — Tara, Kristin and Jordan — sued the Rural Municipality of East St. Paul, outside Winnipeg, including its former police chief Harry Bakema, the Winnipeg Police Service, including five officers who investigated the matter, and the provincial government, including special prosecutor Marty Minuk.

They were seeking unspecified general and aggravated damages for emotional and mental distress, including depression and anxiety following Crystal Taman's death on Feb. 25, 2005.

The only person the family did not sue was Harvey-Zenk, who originally faced several charges including impaired driving causing death. But all charges except dangerous driving causing death were stayed in a controversial plea bargain and he was sentenced to two years less a day to be served at home.

Under Manitoba Public Insurance's no-fault rules, crash victims can't sue drivers for damages.

The province of Manitoba and City of Winnipeg will split the costs of the claim.

"My clients are delighted not only with the fact that there was an inquiry and the results of the inquiry, my clients are very happy as I've told you with the resolution of the lawsuit," said Gene Zazelenchuk, the lawyer for the family.

"It had the potential to go on for a long time with a lot of dicey legal issues and what I can tell you is the matter has been resolved and my clients and I are both very happy," the lawyer said.

A spokeswoman for Justice Minister Dave Chomiak said officials wanted to settle the case quickly.