The settlement will allow customers to essentially reopen certain uninsured, underinsured and medical claims filed with the company by Montana customers since the mid-1990s. Tens of thousands of policy holders who insured multiple vehicles with Safeco will be notified in May 2004 that they have 90 days to ask that their claims be reconsidered in light of the settlement. Notices will be sent on or before May 1, according to attorneys who represent Safeco.

The settlement was reached as a byproduct of a Montana Supreme Court ruling a year ago, Hardy v. Progressive Specialty Insurance Company. In that decision, the court ruled that insurance provisions prohibiting "stacking'' of multiple insurance policies were unenforceable. The court also struck down a Montana law that allowed insurance companies to include anti-stacking language in their policies.

Stacking simply means adding the coverage of multiple policies. For instance, if a customer purchased uninsured motorist coverage of $50,000 in policies for three cars, he could potentially collect $150,000 to compensate for injuries caused by an uninsured motorist. The Montana court ruled that uninsured and underinsured motorist coverage was "personal and portable,'' following the policy holder, not the vehicle.

The issue of whether the Hardy ruling should be applied retroactively has not been decided by the courts. Safeco, however, agreed to apply its case reviews to cases going back eight years, which is the statute-of-limitations period for claims asserted in the lawsuit. When policy holders receive the notice of the settlement, they will also receive a "Montana Proof of Claim'' form asking basic information needed to re-examine their cases. Policyholders must respond within 90 days or forfeit the right to reopen their claims.