The state of California has agreed to pay $27 million to Jaycee Dugard, the woman held captive for 18 years after being abducted at the age of 11.
Ms Dugard, now 30, bore two daughters while imprisoned before being discovered last August in the backyard of the home of Phillip Garrido, the alleged kidnapper and father of the children.
She and her daughters, now 15 and 12, have claimed psychological, physical and emotional damages.
They filed claims in February saying they had remained undiscovered even though parole agents for the state Department of Corrections and Rehabilitation began supervising Mr Garrido in 1999.
He was being monitored following a previous conviction for rape and kidnap in Nevada. He and his wife Nancy have pleaded not guilty to charges that they kidnapped and raped Ms Dugard.
Compensation for 'horribly damaged' lives
Both houses of the California state legislature overwhelmingly approved the settlement.
"It is compensation for three people for the rest of their lives who have been horribly damaged over a period of 17 or 18 years," the BBC quotes mediator Daniel Weinstein as telling the Associated Press news agency.
Mr Weinstein said the money would be used to pay for therapy, ensure privacy, buy the family a home, pay for education and replace lost income.