A class action insurance lawsuit related to the 1998 Quebec ice storm has been settled out of court.

The proposed $12.5-million out-of-court settlement between consumer advocacy group Option Consommateurs and subsidiaries of Intact Financial Corp. covers additional living expenses related to the natural disaster, Intact said in a news release on Tuesday.

The settlement is subject to approval by the Quebec Superior Court in the next few months.

The agreement with Option Consommateurs applies to more than 200,000 individuals.

The class action suit launched by Option Consommateurs sought to determine, among other things, whether the insurance companies had an obligation to compensate policyholders for additional living expenses incurred as a result of the power outages.

The 1998 ice storm is considered Canada's most costly natural disaster. It forced thousands of Quebecers, many in the Montreal area, out of their homes for days, leaving them without electricity after hydro towers and trees were toppled.

Approximately $1.6 billion was paid out to consumers by insurance companies, including more than $350 million by Intact subsidiaries.