Melainey (corr) Rose, a 36-year-old nurse from Inverness, died after tanker driver Shane Fraser ploughed in to her car.
Her 67-year-old mother, Catherine, was severely injured in the December 2007 crash just north of Inverness.
Fraser claimed he had been cleaning dust from his windscreen and sneezed so violently he jerked up in his seat and swerved across the road.
The 49-year-old, from Inverness, denied dangerous driving but was found guilty and sentenced to four years in jail in 2009.
It has now emerged that Mrs Rose, from Brora, 50 miles north of Inverness, launched legal action for compensation against Fraser in the Court of Session last year.
It is understood that compensation was demanded both for Mrs Rose, who spent five months in hospital and has still not recovered from the accident, and for the death of her daughter.
Her son, David, also from Brora, said today (fri): “It was settled out of court.”
Mr Rose, 43, added: “She’s still in a a right mess.
“She had 80% injuries – the surgeons were amazed she was alive.”
Although the case was brought against Fraser, insurers for his employers handled the claim.
Mr Rose confirmed: “It was against Calor Gas and their insurance company.”
The family declined to make any further comment or reveal the amount of damages that had been paid.
At Fraser’s trial, evidence was heard that his vehicle hit oncoming traffic on the A9 near Cromarty Bridge, around five miles north of Inverness.
Asked what caused the tragedy Fraser, who was a first offender, said the crash was ‘down to the jerk and the sneeze.’
He said he heard a bang so loud he thought his tanker had blown up.
He first struck a car being driven by John Glass, injuring him and a passenger, before the vehicle slammed into Melainey’s green Mini.
The McMillan cancer nurse was taking her mother home to Brora after a hospital appointment.
After Fraser was found guilty at the High Court in Edinburgh, trial judge Lord Menzies said: “This case like all such cases involving the causing of death by dangerous driving is a tragedy.
“First and foremost it is a tragedy for the family of Melainey Rose whose life was cut short when she was aged only 36.
“It has also had a very serious impact on the life of Catherine Rose who was seriously injured as a result of the collision between the lorry you were driving and the car she was in.
“She received treatment as an inpatient for at least five months.”
In 2011 a family were awarded £270,000 after dad-of-three Paul Bellingham, 40, was killed in a road accident in Ayrshire.
Damages for permanent injuries can be much higher, reflecting years of personal care.
In 2009, Sean Milligan, 44, was awarded £3.3 million after he was severely injured in a crash with a banned driver.
Mr Milligan, from Hamilton, Lanarkshire, was left needing medical care for the rest of his life after the crash in nearby Carluke in 2004.
Calor Gas declined to comment on the case.